Exhibit 10.35


    
      

    


    Exhibit
      10.35


    SETTLEMENT
      AGREEMENT

    


    


    SETTLEMENT
      AGREEMENT DATED MARCH 6, 2006, IS ENTERED INTO BY AND
      BETWEEN:

    


    
      	 	
              (I)

            	
              ON
                ONE PART, BY: 

            


    

    
      	 	
              a.

            	
              MEGA
                CABLE, S.A. DE C.V. (HEREINAFTER REFERRED TO AS “MC”), REPRESENTED BY MR.
                FRANCISCO JAVIER R. BOURS
                CASTELO;

            


    

    
      	 	
              b.

            	
              MCM
                HOLDING, S.A. DE C.V., (HEREINAFTER REFERRED TO AS “MCM”) REPRESENTED BY
                MR. FRANCISCO JAVIER R. BOURS CASTELO;


            


    

    
      	 	
              c.

            	
              THE
                PRIVATE SHAREHOLDERS (AS DEFINED HEREUNDER) ALL REPRESENTED BY MR.
                RICARDO
                RÍOS FERRER, 

            


    

    d.     TELEHOLDING,
      S.A. DE C.V. (HEREINAFTER REFERRED TO AS “PURCHASER”), REPRESENTED BY MR.
      FRANCISCO JAVIER R. BOURS CASTELO (MC, MCM, THE PRIVATE SHAREHOLDERS AND
      PURCHASER ARE COLLECTIVELY REFERRED TO AS THE “MC GROUP”),
      AND

    


    
      	 	
              (II)

            	
              ON
                THE OTHER, BY: 

            


    

    
      	 	
              a.

            	
              RCN
                INTERNATIONAL HOLDINGS, INC. (HEREINAFTER REFERRED TO AS “RCN INT.”)
                AND

            


    

    
      	 	
              b.

            	
              RCN
                CORPORATION, INC. (HEREINAFTER REFERRED TO AS “RCN
                CORP”).

            


    

    (RCN
      INT. AND RCN CORP. ARE JOINTLY REFERRED TO AS THE “RCN
      GROUP”)

    


    (THE
      MC GROUP AND THE RCN GROUP ARE HEREINAFTER COLLECTIVELY REFERRED TO AS THE
      “PARTIES” AND INDIVIDUALLY AS A “PARTY”).

    


    


    WHEREAS,
      each
      of
MC
      and
      MCM is
      a
      company duly organized and validly existing under the laws of the United Mexican
      States;

    


    WHEREAS,
      the
      PRIVATE SHAREHOLDERS (listed
      in Exhibit
      A,
      attached hereto), are individuals of Mexican Nationality with the legal capacity
      to enter into this Settlement Agreement;

    


    WHEREAS,
      the
      representative of each of the MC Group is duly empowered and authorized to
      execute this Settlement Agreement, and as of today such powers and authority
      has/have not been revoked, limited or modified in any manner
      whatsoever;


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    WHEREAS,
      RCN INT.
      is a
      company duly incorporated and validly existing in accordance with the laws
      of
      the State of Delaware, United States of America and their representative(s)
      is(are) duly empowered and authorized to execute this Settlement Agreement,
      and
      as of today such powers and authority has/have not been revoked, limited or
      modified in any manner whatsoever;

    


    WHEREAS,
      RCN CORP is
      a
      company duly incorporated and validly existing in accordance with the laws
      of
      the State of Delaware, United States of America and their representative(s)
      is(are) duly empowered and authorized to execute this Settlement Agreement
      and
      as of today such powers and authority has/have not been revoked, limited or
      modified in any manner whatsoever;

    


    WHEREAS,
      MC and
      RCN
      INT.
      entered
      into a Subscription Agreement executed as of January 19, 1995;

    


    WHEREAS,
      MC, the
      PRIVATE
      SHAREHOLDERS
      and
RCN
      INT. entered
      into a Shareholders Agreement executed as of January 24, 1995;

    


    WHEREAS,
      MC, the
      PRIVATE
      SHAREHOLDERS and
      CTEC
      Corporation,  entered
      into a Support and Guarantee Agreement, executed as of January 19, 1995, that
      was subsequently assumed by RCN Corp. (the Subscription Agreement, the
      Shareholders Agreement and the Support and Guarantee Agreement are hereinafter
      referred to collectively as the “MC-RCN Corporate Agreements”, each of which is
      enclosed hereto as EXHIBIT
      “B”);

    


    WHEREAS,
      MCM, assumed
      MC’s
      obligations under the MC-RCN Corporate Agreements, as a result of a spin-off
      from MC
      dated
      November 1st,
      2001. 

    


    WHEREAS,
      on
      this
      date, the PRIVATE
      SHAREHOLDERS, through
      PURCHASER, entered
      into a Stock Purchase Agreement with RCN
      INT.,
      pursuant to which the latter sells to PURCHASER all of its shares, rights and
      interest in MC
      and
      in
MCM,
      that
      is
      enclosed hereto as EXHIBIT
      “C”
      (hereinafter referred to as the “Stock Purchase Agreement”).

    


    WHEREAS,
      on
      November 14, 2005, RCN
      CORP
      filed a
      motion in
      the
      United States Bankruptcy Court for the Southern District of New York, (“the
      Bankruptcy Court”) that is enclosed hereto as Exhibit
      “D”,
      relating to the Support and Guarantee Agreement (the “Bankruptcy Motion”);
      and

     

    WHEREAS,
      as of
      November 14, 2005, the MC
      GROUP,
      filed
      an arbitration petition against RCN
      INT.
      before
      the International Court of Arbitration, of the International Chamber of Commerce
      in Paris, France, reference 14098/CCO, that is enclosed hereto as Exhibit
      “E”
      (the
“Arbitration Petition”) (generally, the “Arbitration Proceeding”)



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    NOW,
      THEREFORE,
      in
      consideration of the foregoing and of the mutual promises and covenants
      contained herein, the Parties hereto agree as follows:

     

    


    CLAUSES

    
 

    1.-
      Settlement.

    


    Except
      with respect to any claims or disputes arising under the Stock Purchase
      Agreement or this Agreement, as of the Closing Date and upon Closing (as such
      terms are defined in the Stock Purchase Agreement), each of the members of
      the
MC
      Group and
      of
      the RCN
      Group,
      hereby
      expressly, irrevocably and unconditionally agree to finally settle, resolve,
      dismiss and discontinue all past, present and future claims and disputes among
      any of them that ever existed, exist now or may exist in the future with respect
      to all periods from the beginning of time until the Closing Date, including
      the
      withdrawal of the Bankruptcy Court Motion with prejudice and termination of
      the
      Arbitration Proceeding with prejudice. Each Party shall bear its own costs
      with
      respect to these proceedings, to the termination of the Agreements pursuant
      to
      Section 2 below and to this Settlement.

    


    


    2.-
      Termination
      of the Agreements.

    


    As
      of the
      Closing Date and upon Closing, each of the members of the MC
      Group and
      of
      the RCN
      Group, hereby
      expressly, irrevocably and unconditionally agree to terminate and leave without
      any further legal effect, each of the MC-RCN Corporate Agreements, including
      any
      other agreement, contract or understanding related to the foregoing other than
      the Stock Purchase Agreement and this Settlement Agreement.

    


    


    3.-
      Assurances. 

    


    On
      the
      Closing Date and upon Closing:

    


    
      	 	
              (i)

            	
              The
                MC
                Group
                shall file with the International Court of Arbitration of the
                International Chamber of Commerce an irrevocable withdrawal and dismissal
                of the Arbitration Petition and RCN
                INT.
                shall file with the International Court of Arbitration of the
                International Chamber of Commerce a letter consenting to the MC
                Group’s
                irrevocable withdrawal and dismissal of the Arbitration Petition
                and each
                of the MC
                Group
                and the RCN
                Group
                shall take any other actions necessary to terminate the corresponding
                Arbitration Proceeding; copies of such withdrawal and such consent
                letter,
                as approved by both Parties, are enclosed hereby as Exhibits
                “F-1“
                and “F-2”;
                and

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	 	
              (ii)

            	
              RCN
                CORP shall
                file with the Bankruptcy Court an irrevocable withdrawal of the Bankruptcy
                Motion; a copy of this withdrawal, as approved by both Parties, is
                enclosed hereby as Exhibit
                “G“;
                and

            


    

    


    
      	 	
              (iii)

            	
              Each
                of the MC
                Group and
                of the RCN
                Group shall
                withdraw any other claim or action filed with any other authority,
                panel,
                arbitration institution, mediator or otherwise, related to each other
                for
                whatever reason.

            


    

    


    


    Each
      of
MC
      Group
      and
RCN
      Group
      agree to
      indemnify and hold harmless each other if there is any judgment, ruling, order
      or decree issued by any judicial or arbitral tribunal or by any other entity
      that may arise from any claim not withdrawn pursuant to the terms of this
      Settlement Agreement. Such indemnity shall include all costs, including legal
      fees, incurred by the other party in the event that the corresponding proceeding
      is not dismissed by the International Court of Arbitration of the International
      Chamber of Commerce or the Bankruptcy Court. Each Party agrees that it shall
      not
      seek or support an award of sanctions against the other Party arising from
      the
      commencement of either the Arbitration Proceedings or the Bankruptcy Court
      proceedings and each Party agrees that upon request by the other Party, it
      shall
      cooperate (at the requesting Party’s sole expense) in opposing the imposition of
      any such sanctions against the requesting Party. For the avoidance of doubt,
      however, the indemnity contained in this Paragraph 3 shall not include indemnity
      for sanctions, or for costs associated with sanction proceedings, if sanctions
      are sought or imposed against a Party through any process other than a process
      initiated by a Party or an assignee, affiliate or shareholder of a
      Party.

    


    


    


    4.-
      Mutual
      Release.

    


    


    Except
      with respect to any claims, causes of action, liabilities, or other obligations
      arising under the Stock Purchase Agreement or this Agreement or any other
      agreements entered into by the Parties in connection therewith, as of the
      Closing Date and upon Closing, each of the MC
      Group and
      of
      the RCN
      Group, including
      their respective affiliates, subsidiaries, parent companies, shareholders,
      officers, directors, representatives and agents, hereby expressly, irrevocably
      and unconditionally releases the other from any and all claims causes of action,
      liabilities, or other obligations (whether absolute or contingent) existing
      in
      the past, now or in the future with respect to the periods from the beginning
      of
      time until the Closing Date under the Stock Purchase Agreement, which relate
      to
      or involve the RCN Group’s ownership of the Shares, the MC-RCN Agreements and
      all matters relating thereto.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    5.-
      Applicable Law.

    


    This
      Agreement shall be governed by the laws of the United Mexican
      States.

    


    


    6.-
      Arbitration

    


    All
      disputes arising under or in connection with this Settlement Agreement shall
      be
      finally settled under the Rules
      of
      Arbitration of the International Court of Arbitration of the International
      Chamber of Commerce (“ICC”) by
      a
      panel of three arbitrators, two appointed by each of the MC
      Group and
      the
RCN
      Group
      and the
      third (to be the Chairman) appointed in accordance with the said Rules. The
      arbitration proceedings are to take place in the City of Houston, State of
      Texas, United States of America including the issue of the arbitration award.
      The arbitration proceedings shall be conducted in English. The Parties expressly
      waive any other jurisdiction which may correspond to them by reason of their
      current or future domiciles, or for any other reason whatsoever.

    


    


    7.-
      Modifications.
      

    


    This
      Settlement Agreement, and any of its terms, conditions and provisions may be
      modified, amended, altered, supplemented, added to, canceled or terminated
      only
      by mutual agreement in writing signed by the duly authorized representatives
      of
      the Parties.

    


    


    8.-Counterparts.

    


    This
      Settlement Agreement may be executed simultaneously in two or more counterparts,
      each of which shall be deemed an original, but all of which together shall
      constitute one in the same instrument.

    


    


    9.-Further
      Assurances.

    


    The
      Parties shall, contemporaneously herewith or hereafter, execute such additional
      documents and take any other action as may be reasonably necessary to evidence
      or give effect to the terms and purpose of this Settlement Agreement. Failure
      of
      Purchaser to obtain any of the necessary authorizations or approvals referenced
      in Section 3 of the Stock Purchase Agreement shall have no effect on the
      obligations or effectiveness of this Agreement.

    


    


    10.-
      Entire
      Agreement.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    This
      Settlement Agreement, the Stock Purchase Agreement and any other agreements
      entered into by the Parties in connection therewith constitute the entire
      agreement between the Parties and supersede and replace any and all other
      negotiations, conversations, understandings and/or agreements, written, oral,
      implied or otherwise.

    


    


    11.
      Notifications.

    


    Any
      notice or communication to be given by the Parties hereunder, shall be sent
      to
      each other by hand, via courier or facsimile, return receipt requested, and
      shall be valid as of the date of such receipt, if delivered to the following
      addresses:

    


    


    
      	
              If
                to MC GROUP

            	 
	 	 	 
	 	
              Ave.
                Miguel Alemán 300 Norte

            	 
	 	
              Centro

            	 
	 	
              Ciudad
                Obregón, Sonora

            	 
	 	
              85000
                México.

            	 
	 	 	 
	 	
              Attention:
                Javier R. Bours Castelo. 

            	 
	 	 	 
	 	 	 
	
              If
                to RCN GROUP

            	 
	 	 	 
	 	
              196
                Van Buren Street, Suite 300, Herndon, VA. 20170, U.S.A:

            	 
	 	
              Attention:
                Mr. Peter D. Aquino

            	 


    

    


    


    


    12.
      Conditionality.

    


    The
      provisions of this Agreement shall be conditioned upon and shall not be
      effective until, the Closing Date and upon Closing being fully consummated
      pursuant to the Stock Purchase Agreement.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties have duly executed this Settlement Agreement on the date first above
      written.

    


    


    
      	
              MEGA
                CABLE, S.A. DE C.V.,:

            	 	 	
              MCM
                HOLDING, S.A. DE C.V.:

            	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              By:

            	
              /s/
                Javier Bours

            	 	
              By:

            	
              /s/
                Javier Bours

            	 
	 	
              Name:
                Javier Bours

            	 	 	
              Name:
                Javier Bours

            	 
	 	
              Title:
                Chairman

            	 	 	
              Title:
                Chairman

            	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              THE
                PRIVATE SHAREHOLDERS

            	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              By:

            	
              /s/
                Ricardo
                Rios Ferrer

            	 	 	 	 
	 	
              Name:
                Ricardo Rios Ferrer

            	 	 	 	 
	 	
              Title:
                Attorney in Fact

            	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              RCN
                INTERNATIONAL HOLDINGS,  INC.

            	 	
              RCN
                CORPORATION, INC.

            	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              By:

            	
              /s/
                Peter D. Aquino

            	 	
              By:

            	
              Peter
                D. Aquino

            	 
	 	
              Name:
                Peter D. Aquino

            	 	 	
              Name:
                Peter D. Aquino

            	 
	 	
              Title:
                Chief Executive Officer

            	 	 	
              Title:
                Chief Executive Officer