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EXHIBIT 10.1

SEPARATION AND RELEASE AGREEMENT

This Separation and Release Agreement is entered into this 4th of August, 2006
by and between RCN Corporation, a Delaware corporation (together with its
Affiliates, the “Company”), and Timothy James Dunne (the “Executive”). The
parties may individually be referred to herein as a “Party” and collectively as
the “Parties.”

WHEREAS, the Company has determined to restructure its management of certain
functions, including the elimination of the position currently occupied by
Executive; and

WHEREAS, the Parties desire to effect the separation of Executive from the
Company in a manner consistent with such management reorganization and on the
terms and conditions set forth more fully herein.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein
contained, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto, intending
legally to be bound, hereby agree as follow.

1.     Separation Date. The Executive’s employment with the Company shall
terminate effective as of July 7, 2006 (the “Separation Date”).

2.     Separation Payments and Benefits. As consideration for the Executive’s
execution of this Agreement and the Executive’s compliance with the terms,
conditions, and obligations set forth herein, the Company shall provide
Executive with the benefits set forth below.

(a)   Severance. At the next date for payment of regular payroll to the
Company’s employees following the execution date hereof and the expiration of
any applicable period for revocation under Section 6(k) (the “Payment Date”),
the Company shall make a one-time, lump sum cash payment to Executive (the
“Severance Payment”) in the gross amount of $225,000.00, which will be subject
to customary withholding for Federal, state and local taxes (an amount equal to
one year of Executive’s base salary as of the date of this Agreement), subject
to further reduction pursuant to Section 2(c).

(b)   Prorated Bonus. In addition to the Severance Payment, the Company shall
pay to Executive the prorated portion of annual bonus pursuant to the Company’s
2006 Short Term Incentive Plan (the “Bonus Plan”) attributable to Executive’s
employment with the Company for the period from January 1, 2006 through the
Separation Date (the “Bonus Payment”). The parties agree and acknowledge that
Executive’s target annual bonus under the Bonus Plan attributable to fiscal 2006
was 40% of Executive’s base salary. The Bonus Payment shall be paid by the
Company to the Executive at the time that the Company generally makes payments
to the employees of the Company under the Bonus Plan.

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(c)   Continuation of Benefits. The Company will continue the Executive’s
participation in all medical, dental, and vision benefit plans in which
Executive is enrolled as of the Separation Date for a period ending on July 31,
2007 (the “Benefits Expiration Date”). In addition, the Company will permit
Executive to continue participation in any Company life insurance program in
which Executive participates as of the Separation Date through the Benefits
Expiration Date. All benefits provided to Executive under this Section 2(c)
shall be on the same terms and conditions as if Executive were still employed by
the Company, except that Executive’s continued employment by the Company shall
not be a condition to receiving such benefits. Executive’s aggregate portion of
the costs for any such continued benefits through the Benefits Expiration Date
shall be deducted in a lump sum from the Severance Payment. Notwithstanding the
foregoing, the rights to receive any and all benefits under this Section 2(c)
shall immediately terminate upon the Executive becoming eligible for medical
benefits in connection with full-time employment after the Separation Date, and
no amounts deducted from the Severance Payment in respect of this Section 2(c)
shall be payable to Executive at such time.

(d)   Equity Compensation. All vested options to purchase the Company’s common
stock, $0.01 par value per share (the “Options”) made to Executive pursuant to
the 2005 Stock Compensation Plan (the “Plan”) shall remain outstanding under
their current terms and conditions through December 31, 2006 (the “Options
Cancellation Date”), except that the Executive remaining an employee of the
Company shall not be a condition to the continued effectiveness of such awards
under the Plan through the Options Cancellation Date; provided, however, that
any unvested Options granted to Executive under the Plan shall immediately be
cancelled on the Separation Date, and be of no further force and effect. Any
vested, unexercised, Options awarded to Executive under the Plan and outstanding
following the Options Cancellation Date will no longer be exercisable as of the
Options Cancellation Date and shall be cancelled and of no further force or
effect. The Executive shall retain his rights to any unvested shares of
restricted stock held in escrow for future issuance to Executive pursuant to (i)
that certain Restricted Stock Agreement, dated as of March 25, 2005, by and
between the Company and Executive, and (ii) that certain Restricted Stock
Agreement, dated as of November 28, 2005, by and between the Company and
Executive, in each case until March 31, 2007 (the “Equity Cancellation Date”),
following which such unvested shares of restricted stock shall be immediately
forfeited effective as of the Equity Cancellation Date and be of no further
force and effect. Executive shall not be entitled to any future issuance of
shares of restricted Common Stock under any agreements, plans, or understandings
among the Parties. Notwithstanding the foregoing, Executive shall not exercise
any stock options nor trade any shares of the Company’s Common Stock until
August 12, 2006.

(e)   Accrued Benefits. The Company shall pay Executive in cash the value of any
accrued and unused vacation time, commissions, and business expenses.

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3.     Release and Waiver.

(a)   Executive, of Executive’s own free will, hereby voluntarily waives,
releases and forever discharges the Company and its Affiliates, and their
directors, members, managers, officers, employees and agents (the “Released
Parties”) of and from any and all actions or causes of action, suits,
grievances, claims, debts, charges, complaints, contracts (whether oral or
written, express or implied, from any source, other than this Agreement), claims
for recall or reinstatement and promises, whatsoever, in law or equity, which
Executive, or Executive’s heirs, executors, administrators, successors and
assigns, may have, or may have knowledge of or may be charged with knowledge of,
as of the date of this Agreement for, upon, or by reason of any matter, cause or
thing whatsoever including, but not limited to, any and all matters arising out
of Executive’s employment by the Company, the termination of said employment, or
any of the rights, duties, obligations or liabilities, if any, of the Parties
under (i) that certain employment letter, dated January 6, 2005, (ii) that
certain Restricted Stock Agreement, dated as of March 25, 2005, by and between
the Company and Executive, and (iii) that certain Restricted Stock Agreement,
dated as of November 28, 2005, by and between the Company and Executive, in each
case between the Company to the Executive, and including, but not limited to,
any violation of (i) the following Federal statutes, as amended: Title VII of
the Civil Rights Act of 1964; Sections 1981 through 1988 of Title 42 of the
United States Code; the Employee Retirement Income Security Act of 1974; the
Vocational Rehabilitation Act of 1973; the Age Discrimination in Employment Act
of 1967; the Older Workers Benefit Protection Act of 1990; the Family and
Medical Leave Act; the WARN Act; and the Americans with Disabilities Act of
1990, (ii) the following state statutes, as applicable: the Pennsylvania Human
Relations Act, 43 P.S. §§951, et seq.; the New Jersey Conscientious Employee
Protection Act, N.J.S.A. 34:1-1, et seq.; the New Jersey Law Against
Discrimination, N.J.S.A. 10:5-1, et seq.; the California Fair Employment and
Housing Act, Cal. Govt. Code §§12940, et seq.; Article 49B of the Annotated Code
of Maryland, Massachusetts Fair Employment Practices Act, G.L.C. 151B; New York
Human Rights Law, N.Y. Exec. Law §§291, et seq.; D.C. Human Rights Act, D.C.
Code §§1-2500, et seq.; Virginia Human Rights Act, Va. Code §§2.1-715, et seq.;
Illinois Human Rights Act, Ill. Stat. Ch. 775, §§1-101-9-102, (iii) any other
Federal, state or local labor, whistleblower, wage and hour or human rights law,
and (iv) any other alleged violation of any local, state or Federal law,
regulation or ordinance and/or public policy, contract, tort or common law
having any bearing whatsoever on the terms and conditions and/or cessation of
Executive’s employment with the Company that Executive ever had, now has or may
have as of the date of execution of this Agreement.

(b)   Executive understands and agrees that this Agreement affects a general
release, including with respect to claims, if any, that Executive may have
against Company and that the Executive is unaware of as of the date of this
Agreement. Executive hereby waives all claims, if any, that Executive may have
and that Executive does not now know, or suspect to exist, against the Released
Parties and agrees that this Agreement extinguishes those claims.

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4.     Representations and Warranties. Executive hereby represents and warrants
to the Company as follows:

(a)   Review of Agreement. Executive has been afforded a period of forty-five
(45) days from the date of delivery of this Agreement to Executive to (i) read
and consider the terms set forth in the Agreement, sign, date, and return it to
the Company, and (ii) consider the data, available from the Company’s Human
Resources department, relating to the age and title of the other Company
employees who have been separated in connection with the management
restructuring referenced in the Recitals. Executive has carefully considered the
terms and conditions contained in this Agreement and Executive understands that
this Agreement compromises, settles, bars and waives any and all claims and
grievances that the Executive may have or could possibly have against the
Released Parties as of the date of this Agreement.
 
(b)   Representation of Counsel. Executive has been encouraged by the Company to
consult with and seek the advice of an attorney in connection with his review
and execution of this Agreement.

(c)   Early Execution. In the event that the Executive has executed this
Agreement prior to the expiration of the forty-five (45) day period following
the date of delivery of this Agreement to Executive, Executive agrees and
acknowledges that such decision was entirely voluntary and was not compelled,
and that he had the opportunity to consider this Agreement for the entire
forty-five (45) day period referenced in Section 4(a).

(d)   Claims. Executive represents and warrants that, at the time of the signing
of this Agreement, he has not filed, caused to be filed, or permitted to be
filed on Executive’s behalf, any charge, grievance, complaint, suit or action
before any federal, state or local administrative agency or court, including,
but not limited to, a discrimination claim or workers compensation claim,
against any of the Released Parties. Executive agrees that he will not submit
this Agreement as evidence of any kind of liability by any of the Released
Parties, and that this Agreement is not relevant or material with respect to any
issue of wrongdoing or liability on the part of any of the Released Parties.

(e)    Inventions. Executive has communicated to the Company all inventions,
discoveries, concepts and ideas, whether patentable or not, including but not
limited to hardware and apparatus, processes and methods, formulas, computer
programs and techniques, as well as improvements thereof and knowledge related
thereto conceived, completed, or reduced to practice (whether solely by
Executive or jointly with others) during the period of Executive’s employment by
the Company, that are (i) related to the present or prospective business of the
Company, (ii) the result of Executive’s use of the Company’s equipment,
facilities, materials or personnel, or (iii) the result from any work of
Executive on behalf of the Company (collectively, the “Developments”).

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(f)    Return of Company Property. Executive acknowledges that he has returned
to the Company, or has made arrangements to return, any and all of the Company’s
personal property used during Executive’s employment including, without
limitation, the Company’s files and documents, whether stored in electronic
format or in hard copy, (including sales or prospect lists), portable
telephones, access cards, office keys, laptops, Blackberries, calling cards,
credit cards, Palm Pilots, and pagers.

(g)   Withholding. Executive acknowledges and agrees that the Company may
withhold any amounts from the Severance Payment (as adjusted) or any other
payments made to Executive hereunder pursuant to any applicable Federal, state,
or local tax withholding laws, rules, or regulations, or pursuant to any other
applicable law.

(h)   Obligations. Executive understands and agrees that he would not receive
the consideration referred to in Section 2 except for Executive’s execution of
this Agreement and compliance with the covenants and obligations set forth
herein. Neither the entering into of this Agreement nor anything contained
herein shall in any way be construed or considered to be an admission by the
Company of non-compliance with any law or admission of any wrongdoing
whatsoever.

(i)    Validity of Agreement. Executive agrees that this Agreement will not be
the subject of any claim of mistake of fact or duress. Having elected to execute
this Agreement and to comply with the obligations set forth herein, Executive
freely and knowingly, and after due consideration, has entered into this
Agreement intending to waive, settle, and release all claims Executive has
against the Company through the date of this Agreement.

5.     Covenants. The Company and Executive, as applicable, hereby covenant and
agree as set forth below.

(a)   Nonsolicitation. Executive agrees that, for a period of two (2) years
following the Separation Date, he shall not (i) hire, attempt to hire, recruit,
solicit, persuade, assist in the hiring of, or entice away from the Company any
individual who is (or was at any time in the preceding six (6) months prior to
such solicitation) an employee of the Company or an exclusive consultant to the
Company, unless such individual was involuntarily terminated by the Company, or
(ii) otherwise interfere with the Company’s employment or consulting
relationship with another individual.

(b)   Noncompetition. Executive agrees for a period of one (1) year following
the Separation Date not to accept employment with, perform consulting services
for, or otherwise contribute any of his knowledge, directly or indirectly, to
any Multiple Systems Operator (“MSO”) or Regional Bell Operating Company
(“RBOC”) each as such terms are commonly understood in the telecommunications
and cable television industries; provided, however, that Executive shall be
permitted to accept employment with such MSO or RBOC if he his employment or
consulting services relate solely to operations that do not compete with the
Company in any of the Company’s geographic markets as of the date hereof;
provided, further, that Executive may accept employment with a consulting firm
that provides consulting services to such MSO or RBOC so long as Executive
performs his obligations under Sections 5(a) and 5(d) during the entire period
of such consultancy. Notwithstanding the foregoing, Executive may accept
employment that would otherwise breach the provisions of the preceding sentence
if Executive obtains the prior written consent of the Chief Executive Officer,
Chief Financial Officer or General Counsel of the Company, which consent shall
have been deemed to have been given if a representative of the Company fails to
respond to Executive within five (5) Business Days of Company’s receipt of
written notice of such request.

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(c)    Inventions Assignment. Executive hereby assigns to the Company
Executive’s entire right, title and interest in and to any Developments and all
copyrights in any such Developments, and Executive agrees to execute any
documentation that Company deems necessary or advisable to secure Company’s
rights in any such Developments and to cooperate with Company to defend
Company’s rights in any such Developments.

(d)   Confidentiality. Executive agrees not to at any time divulge to any
person, firm, corporation or other entity (other than the Company in connection
with the performance of his obligations hereunder) information that is not in
the public domain and that was received by the Executive during the period of
his employment by the Company with regard to the Company’s customers, prospects,
pricing, marketing information, personnel matters, financial matters, business
accounts and records, corporate documentation or structure, business strategy or
any other information relating to the affairs of the Company in any manner
whatsoever, and all such information will be kept confidential by Executive and
will not be revealed, except as required by applicable law, to anyone without
the prior written approval of the Chief Executive Officer of the Company. In the
event that Executive is required to disclose any such information in accordance
with applicable law, Executive shall use his best efforts to provide written
notice to the Company of the required disclosure and permit the Company the
opportunity to contest such disclosure or seek a protective order with respect
to such proposed disclosure. In addition, unless otherwise disclosed by the
Company, this Agreement, its existence and its terms and conditions shall be
kept confidential by Executive at all times, except for disclosure to attorneys,
tax advisors, and other professional advisors in connection with the negotiation
and implementation of its terms.

(e)   Nondisparagement. Executive agrees that he shall not, directly or
indirectly, disparage (in writing or orally) the Company or any of its officers,
directors, employees, shareholders, lenders, or agents, nor shall the Executive
make any public comment regarding the Company without the prior written consent
of the Company’s Chief Executive Officer; provided, however, that the inclusion
in any publicly available biographical statements pertaining to Executive of a
description of Executive’s title, responsibilities, and accomplishments while
employed with the Company shall not be a breach of this Section 5(e). In
addition, Executive shall not, for a period of two (2) years following the
Separation Date, communicate with any employee, creditor, stockholder, director,
or prospective acquirer of the Company’s assets or securities with the express
or implied purpose of (i) disparaging the Company or any of its officers,
directors, employees, shareholders, lenders, or agents, or (ii) generating or
augmenting employee or employees’ dissatisfaction with the Company or its
business.

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(f)    Transition Plan. Executive will promptly provide to the Company a
complete itemization and description of matters and projects that have been
managed by Executive and that are in progress as of the Separation Date, along
with reference to the other Company employees involved in such projects (the
“Transition Memorandum”). Executive shall also promptly prepare evaluations of
each of Executive’s direct reports for the first two quarters of 2006 in
accordance with the Company’s customary employee evaluation practices. The
Company shall provide Executive with the resources (computer access, printer,
etc.) adequate to fulfill his responsibilities under this Section 5(f).
Executive agrees to be reasonably available for sixty (60) days following the
Separation Date to consult with, cooperate with, and provide information to the
Company regarding any matter in which Executive was involved during his
employment with the Company, and to update the Transition Memorandum as needed
during such period.

(g)   Job Performance Documentation. Upon request, the Company will provide to
Executive a written performance evaluation relating to the most recent fiscal
year, or portion of a fiscal year, that Executive was employed by the Company,
in a form and to the extent consistent with Company’s past employment evaluation
practices.

(h)   Cooperation. For a period of three (3) years after the Separation Date,
Executive agrees that he shall fully cooperate with the Company with respect to
any litigation in which the Company may become involved in the future, and to
make himself reasonably available, upon the request of the Company, to provide
truthful, accurate, and complete information at interviews, depositions, and
court appearances. The Company agrees to reimburse Executive for any reasonable
business expenses associated with such cooperation.

(i)    COBRA. Beginning on the date that the Company no longer provides the
benefits set forth in Section 2(c), the Executive shall be eligible for health
insurance coverage pursuant to the terms of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”).

(j)    Travel and Expense Reimbursement. Executive agrees to submit all
applicable requests for reimbursement of travel and other expenses incurred by
Executive prior to the Separation Date within thirty (30) days following the
Separation Date, and the Company shall thereafter promptly reimburse Executive
for such expenses in accordance with its customary expense reimbursement
practices. Executive agrees that he shall not be entitled to reimbursement for
any expenses unless a request for such reimbursement has been submitted within
the period set forth in this Section 5(i). 

(k)   Expenses. To the extent permitted by law, Executive expressly agrees that,
if the Company complies with the material terms of the Agreement and the
Executive nevertheless commences a legal action against the Company, Executive
shall (i) be obligated to return to the Company the full amount of the Severance
Payment, the Bonus Payment, and the value of any and all benefits conferred upon
Executive hereunder, and (ii) and all indemnify the Company for the full and
complete costs, including reasonable attorneys’ fees (whether incurred in a
third party action or in an action to enforce this Agreement), court costs, and
other related expenses.

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6.     Miscellaneous.

(a)   Severability. In the event that any provision of this Agreement is
challenged by the Executive or his representatives and declared illegal or
unenforceable by any court of competent jurisdiction and cannot be modified to
be enforceable, such provision shall immediately become null and void, leaving
the remainder of the Agreement in full force and effect. If as a result of such
challenge, however, any portion of the general release language found generally
(but not only) in Section 3 of this Agreement is ruled to be unenforceable,
Executive agrees that he shall repay to the Company the Severance Payment, the
Bonus Payment, and value of any and all benefits conferred upon Executive
hereunder, and the Company shall have no further obligations under this
Agreement.

(b)   Public Disclosure. Executive understands and agrees that the Company may
be obligated under applicable Federal securities laws to publicly disclose the
separation of Executive from the Company, including the possible disclosure of
this Agreement, and the Executive hereby consents to any such disclosure, the
scope and content of which shall be in the Company’s sole discretion.

(c)    Injunctive Relief. The Executive acknowledges that monetary damages would
be insufficient to compensate the Company in the event of breach or threatened
breach of any of the provisions of this Agreement. Should Executive violate or
threaten to violate any of the provisions of this Agreement, the Company will be
entitled to an injunction to stop the Executive from continuing such breach or
threatened breach.

(d)   Governing Law. The Parties agree, notwithstanding applicable conflict of
laws principles, that this Agreement shall be governed by the laws of the
Commonwealth of Virginia.

(e)    Venue; Jurisdiction; Waiver. The Parties agree that the proper venue for
the enforcement of this Agreement will be the state courts of the Commonwealth
of Virginia, and any Federal court located in the Commonwealth of Virginia, and
the Parties hereby irrevocably agree to the jurisdiction of such courts in
connection with any dispute arising from the terms of, or the performance or
nonperformance of any of the obligations of the Parties arising under, this
Agreement. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE RELATED INSTRUMENTS CONTEMPLATED HEREBY.

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(f)    Counterparts. This Agreement may be executed by the Parties in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

(g)   Entire Agreement. This Agreement constitutes the entire agreement, and
except as set forth in Section 2(d), supersedes any and all prior agreements,
and understandings, both written and oral, between the Parties hereto with to
the subject matter hereof except as otherwise provided herein.

(h)   Amendment. No provisions of this Agreement may be modified, waived,
amended, or discharged unless agreed in writing by the Parties.

(i)    Assignment. This Agreement shall be binding upon and shall inure to the
benefit of each of the Parties, and their respective heirs, legatees, executors,
administrators, legal representatives, successors and assigns.

(j)    No Waiver. No waiver by either Party of any breach by the other Party
shall be deemed a waiver of any similar or dissimilar breach of any provisions
or conditions of this Agreement, whether occurring contemporaneously, in the
past or at a subsequent time.

(k)    Notice. FOR A PERIOD OF SEVEN (7) DAYS FROM THE DATE THAT EMPLOYEE SIGNS
THIS AGREEMENT, EMPLOYEE MAY REVOKE THIS AGREEMENT BY NOTIFYING THE COMPANY IN
WRITING OF THE EMPLOYEE’S INTENT TO DO SO. THIS AGREEMENT SHALL NOT BECOME
EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED. THIS SEVEN (7)
DAY PERIOD MAY NOT BE SHORTENED BY THE PARTIES, BY AGREEMENT OR OTHERWISE.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first written above.
 
 

   
RCN CORPORATION
                                   
By:
/s/ Benjamin R. Preston
     
Name: 
Benjamin R. Preston
     
Title:
SVP, General Counsel & Secretary
               
Date: August 4, 2006
                         
EXECUTIVE
                                        /s/ Timothy James Dunne      
Timothy James Dunne
               
Date: August 4, 2006
 

 
 
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