Document:

Agreement with Merrill Lynch

 Exhibit 10.21 
  
 

 
  

			
	 Global Markets & Investment Banking
	  	December 16, 2003

  
 Mr. Douglas Bradbury 
 Executive Vice President 
 RCN Corporation 
 105 Carnegie Center 
 Princeton, NJ 08540 
  
 Dear Doug: 
  
 Merrill Lynch & Co. (“Merrill Lynch”) is pleased to act as financial advisor to RCN Corporation (the
“Company”) and each of its wholly owned and majority owned subsidiaries (each, a “Controlled Subsidiary”) in connection with any Restructuring Transaction, any Capital Raising Transaction, and/or any Business Combination or Sale
Transaction by or on behalf of the Company or any person or entity formed by or affiliated with the Company (each a “Company Affiliate”) and another party (a “Party”) as set forth herein. This letter agreement is to confirm our
understanding with respect to our engagement. 
  

	(1)	As used in this letter agreement, the term “Restructuring Transaction” shall mean any restructuring, modification, reduction, reorganization (whether or not pursuant to
Chapter 11 of the United States Bankruptcy Code), refinancing and/or recapitalization of the Company with respect to all or a substantial portion of its existing debt obligations listed on Annex B hereto, including, without limitation, a
solicitation of waivers and/or consents; rescheduling of debt maturities; changes in interest rates; settlement or forgiveness of debt; conversion of debt and/or other liabilities into equity; exchange offer involving new securities; or other
similar transaction or series of transactions. 

  

	(2)	As used in this letter agreement, the term “Capital Raising Transaction” shall mean: 

  

	 	(a)	the issuance for cash by the Company or any Company Affiliate in a public or private offering or placement (including any transaction under Rule 144A of the Securities Act of 1933,
as amended) of debt, equity or trust preferred securities or similar instruments, including, without limitation, high yield debt securities, debt securities attached with warrants, mezzanine securities, preferred securities, securities exchangeable
for or exercisable or convertible into debt or equity securities, asset backed securities, or security equivalents; or 

  

	 	(b)	the entering into, or borrowing under, any credit or loan facility or agreement, including but not limited to a second lien credit facility, letter of credit or other debt
arrangement by the Company or any Company Affiliate (excluding the Company’s existing credit facility with JP Morgan Chase, the Evergreen silent second lien facility and any sale and leaseback arrangements and all other credit arrangements now
in place, but including all restructuring, refinancing, modifications and replacements thereof). 

  

	(3)	As used in this letter agreement, the term “Business Combination” means, whether effected in one transaction or a series of transactions: 

  

	 	(a)	any merger, consolidation or other business combination pursuant to which all or substantially all of the business of the Company is combined with that of one or more Parties or one
or more persons formed by or affiliated with a Party, including, without limitation, any joint venture; 

  

	 	(b)	except to the extent that any such transaction would constitute a Sale Transaction, the acquisition, directly or indirectly, by one or more Parties of all or substantially all of
the assets of, or of any right to all or substantially all of the revenues or income of, the Company by way of a negotiated purchase, lease, license, exchange, joint venture or other means; or 

  

	 	(c)	the acquisition, directly or indirectly, by one or more Parties of control of the Company otherwise than through the acquisition of the Company’s capital stock including,
without limitation, by means of the acquisition directly or indirectly, of all or any part of the Company’s debt and transactions effected in connection with, in contemplation of, or as part of a Restructuring Transaction.

  

					
	 Mark C Bush
 Director
	 	 4 World Financial Center
 Floor 29
 New York, NY 10080
	 	 212 449 6642
 FAX 212 449 9120

  

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	(4)	As used in this letter agreement, the term “Sale Transaction” means, whether effected in one transaction or a series of transactions: 

  

	 	(a)	any merger, consolidation or other business combination pursuant to which less than substantially all of the business of the Company is combined with that of one or more Parties or
one or more persons formed by or affiliated with a Party, including, without limitation, any joint venture; or 

  

	 	(b)	the acquisition, directly or indirectly, by one or more Parties of less than substantially all of the assets of, or of any right to less than substantially all of the revenues or
income of, any other assets or businesses of the Company by way of a negotiated purchase, lease, license, exchange, joint venture or other means. 

  

For the purposes of this letter agreement, a Restructuring Transaction, a Capital Raising Transaction, a Business Combination and a Sale Transaction
are together referred to as “Transaction(s)” and Transactions shall include, without limitation, transactions with or by the Company prior to filing for bankruptcy and after emergence from any bankruptcy or other reorganization.

  
 Merrill Lynch will assist the Company in identifying Parties
and in analyzing, structuring, negotiating and effecting proposed Transactions on the terms and conditions of this letter agreement; provided, however, that in connection with a Restructuring Transaction intended to comply with the requirements of
Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), Merrill Lynch shall not provide any services in connection with such Restructuring Transaction, the effect of which would cause the Restructuring Transaction
to fail to meet the requirements for an exemption from the registration requirements of Section 5 of the Securities Act provided by Section 3(a)(9) of the Securities Act. 
  
 If reasonably requested by the Company, Merrill Lynch will render an opinion (the “Opinion”) as to whether or not
the consideration to be paid or received in a proposed Business Combination or a Sale Transaction is fair to the Company from a financial point of view. It is understood that the Opinion will be dated as of a date reasonably proximate to the date of
the definitive agreement between the Company and a Party providing for a Business Combination or a Sale Transaction, as the case may be. It is further understood that the Opinion will be prepared solely for the confidential use of the Board of
Directors and senior management of the Company and will not be reproduced, summarized, described or referred to or given to any other person without Merrill Lynch’s prior written consent. It is further understood that, if the Opinion is
included in the proxy statement or offer to purchase to be mailed to the shareholders of the Company in connection with a Business Combination or Sale Transaction, the Opinion will be reproduced in such proxy statement or offer to purchase in full,
and any description of or reference to Merrill Lynch or summary of the Opinion in such proxy statement or offer to purchase will be in a form acceptable to Merrill Lynch and its counsel. Except as provided in this letter agreement, the Opinion will
not be reproduced, summarized, described or referred to without Merrill Lynch’s prior written consent. Any document or oral or written advice or analysis provided by Merrill Lynch in connection with its engagement hereunder will be solely for
the confidential use of the Board of Directors, counsel and senior management of the Company and will not be disclosed, quoted, reproduced, summarized, described or referred to, nor will any references to Merrill Lynch be made, without Merrill
Lynch’s prior written consent, unless required by law. 
  
 So
as to better co-ordinate proposals and discussions concerning any Transaction, in the event that, during the period of Merrill Lynch’s engagement, the Company or any Controlled Subsidiary or any of its officers, directors, employees or
representatives initiate discussions with or are contacted by or on behalf of any party concerning the possibility of a Transaction, the Company will promptly inform Merrill Lynch in order that Merrill Lynch can evaluate such prospective Party and
its interest and assist the Company and the Controlled Subsidiaries in any subsequent discussions. 
  
 Notwithstanding anything contained in this letter agreement to the contrary: (a) Merrill Lynch makes no representations or warranties about the
Company’s or any Controlled Subsidiary’s ability to (i) successfully improve its operations, (ii) maintain sufficient liquidity to operate its business, (iii) successfully complete any Transactions and (b) Merrill Lynch makes no
representation, warranty or commitment to underwrite, place or purchase any securities or provide any form of financing to the Company or any Controlled Subsidiary. 
  
 The Company and each Controlled Subsidiary, jointly and severally, agree to pay the following fees to Merrill Lynch for its financial
advisory services: 
  

	(1)	 A monthly fee of $100,000 payable in cash, in advance on the first business day of each month and ending on the earlier of the termination of Merrill Lynch’s
engagement or the actual payment of any additional fee pursuant to Clauses (3), (6) 

  

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or (8). Any amounts actually paid pursuant to this clause will be credited towards fees payable pursuant to clauses (3), (6) and (8) of this paragraph;

  

	(2)	“Milestone” fees: 

  

	 	(a)	A Milestone fee of $1,000,000 payable in cash immediately in the event an agreement in principle is reached with one class of creditors and/or investors (or their designated
representatives, other than a Mezzanine Investor as described in (b) below) as part of a proposed Restructuring Transaction. Any Milestone fees actually paid pursuant to this clause 2(a) will be credited towards fees payable pursuant to clauses (3),
(6) and (8) of this paragraph, provided that in the event such Restructuring Transaction is not consummated then any Milestone fees paid to Merrill Lynch pursuant to this clause 2(a), during the period Merrill Lynch is retained by the Company or
within one year thereafter, will be refunded to the Company by Merrill Lynch. 

  

	 	(b)	A Milestone fee equivalent to 50% of the actual fee that would be payable pursuant to paragraph 5 (b) below, payable in cash immediately, in the event an agreement in principle is
reached with a prospective investor(s) in a Mezzanine Security (as defined in paragraph 5 below). Any Milestone fees actually paid pursuant to this clause 2(b) will be credited towards fees payable pursuant to clause (5) (b) of this paragraph,
provided that in the event a Capital Raising Transaction of the type describe in Clause 5 (b) is not consummated, then any Milestone fees paid to Merrill Lynch pursuant to this clause 2(b) will be refunded to the Company by Merrill Lynch.

  

	(3)	If, during the period Merrill Lynch is retained by the Company, or within one year thereafter, the Company undergoes a successful Restructuring Transaction with its creditor and/or
investor groups (other than a Restructuring Transaction intended to comply with the requirements of Section 3(a)(9) of the Securities Act (a “3(a)(9) Offer”)), an advisory fee of $7,500,000, will be payable in cash immediately. In
addition, if the Company terminates Merrill Lynch’s engagement, then it is understood that Merrill Lynch’s advisory fee will be decreased to a total of $5,000,000 and will be payable in cash immediately upon the approval of or agreement to
a Restructuring Transaction (other than a 3(a)(9) Offer) occurring within one year of the termination of Merrill Lynch’s engagement pursuant to this letter agreement. Notwithstanding the prior sentence, if a successful Restructuring Transaction
(other than a 3(a)(9) Offer) is completed by the Company with its investor and/or creditor groups during the period of one year after the end of Merrill Lynch’s engagement hereunder and such Restructuring Transaction is substantially similar to
a proposal for a Restructuring Transaction (other than a 3(a)(9) Offer) that Merrill Lynch presented to the Company during the term of its engagement, a fee of $7,500,000 will be payable in cash immediately upon the approval of or agreement to the
Restructuring Transaction. In no event will the advisory fee (as described in this clause (3), clause (6) below and clause (8) below) total more than $7,500,000; 

  

	(4)	An additional fee in an amount equal to 0.50% of the face amount of current securities of the Company or a Company Affiliate purchased in connection with any cash tender offer or
exchange offer (other than a 3(a)(9) Offer) by the Company or a Company Affiliate relating to an offer to purchase the Company’s or Company Affiliate’s outstanding debt, and/or debt securities, in each case contingent upon and payable in
cash upon the first purchase or exchange of securities pursuant to such tender offer or exchange offer, as the case may be; 50% of any fees actually paid in connection with any cash tender offer or exchange offer pursuant to this clause (4), will be
credited towards fees payable pursuant to clauses (3), (6) and (8) of this paragraph; 

  

	(5)	In connection with a Capital Raising Transaction, an initial purchaser’s, placement agent’s or underwriters’ discount, or bank/loan commitment, utilization and other
customary lending fees and interest, as the case may be, in amounts customary for the provision of such services by comparable investment banks and/or lenders and in each case as agreed to in advance by the Company and Merrill Lynch, will be payable
in cash in U.S. Dollars to Merrill Lynch at the time of the closing of the sale of such securities or at the time of execution of any relevant credit or other applicable type of agreement, or as specifically otherwise provided therein. Specifically,
if the Capital Raising Transaction involves: 

  

	 	(a)	The syndication of a new second lien credit facility, then Merrill Lynch would be entitled to receive a syndication fee of 1.75% on the aggregate amount of commitments under the
credit/loan facility, payable on the date of execution of such credit facility; or 

  

	 	(b)	 The issuance of a “Mezzanine Security” (for these purposes a Mezzanine Security will include a security that has characteristics separate from a second
lien credit facility which include but are not limited to: a cash deferral feature on coupon payments, the inclusion of warrants, detachable or otherwise, the inclusion of equity-linked features, 

  

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and/or corporate governance provisions), then Merrill Lynch would be entitled to receive a placement fee equal to 3.5% of the aggregate proceeds of any
Mezzanine Security. 

  
 Any Capital Raising
Transaction fees actually paid pursuant this clause in excess of $3,000,000, will result in a reduction of the fees payable pursuant to clauses (3), (6) and (8) of this paragraph. Notwithstanding the foregoing, if Vulcan Ventures Inc participates as
a primary investor in any such Mezzanine Security, the placement fee payable to Merrill Lynch in respect of that investment will be 0.5% less than the applicable placement fee payable in respect of any other investor(s). 
  
 If, during the term of this letter agreement or within a 12 month period
thereafter, the Company or any Company Affiliate enters into a Capital Raising Transaction, pursuant to an agreement in principle reached or entered into by the parties thereto during the term of Merrill Lynch’s engagement (whether or not in
writing or binding upon the parties thereto or subject to conditions precedent), Merrill Lynch shall be entitled to receive, and you agree to pay or to cause to be paid to Merrill Lynch, a fee upon the closing of such transaction calculated in
accordance with this Clause 5 as if Merrill Lynch had placed or underwritten all of such securities; 
  

	(6)	In connection with any Restructuring Transaction not otherwise described above, (i) that is intended to be effected, in whole or in part, as a prepackaged, partial prepackaged, or
prearranged plan of reorganization anticipated to involve the solicitation of acceptances of such plan in compliance with the bankruptcy laws of any jurisdiction, by or on behalf of the Company, from holders of any class of the Company’s
securities or indebtedness (a “Plan”) and (ii) that is not intended to comply with Section 3(a)(9) of the Securities Act, a fee in an amount equal to $7,500,000 shall be payable (x) upon receipt of votes from the Company’s creditors
necessary to confirm a prepackaged Plan, the terms of which are acceptable to the Company’s Board of Directors or (y) upon obtaining indications of support from the Company’s creditors which in the good faith judgment of the Board of
Directors of the Company are sufficient to justify filing a prearranged plan of reorganization upon acceptable terms. In addition, if the Company terminates Merrill Lynch’s engagement then it is understood that Merrill Lynch’s
Restructuring Transaction fee, as described above in this clause 6, will be decreased to a total of $5,000,000 and will be payable in cash immediately upon (x) upon receipt of votes from the Company’s creditors necessary to confirm a
prepackaged Plan, the terms of which are acceptable to the Company’s Board of Directors or (y) upon obtaining indications of support from the Company’s creditors which in the good faith judgment of the Board of Directors of the Company are
sufficient to justify filing a prearranged plan of reorganization upon acceptable terms. Notwithstanding the prior sentence, if a Restructuring Transaction, as described above in this clause 6, either (x) receives votes from the Company’s
creditors necessary to confirm a prepackaged Plan, the terms of which are acceptable to the Company’s Board of Directors or (y) upon obtaining indications of support from the Company’s creditors which in the good faith judgment of the
Board of Directors of the Company are sufficient to justify filing a prearranged plan of reorganization upon acceptable terms, during the period of one year after the end of Merrill Lynch’s engagement hereunder and such Restructuring
Transaction is substantially similar to a proposal for a Restructuring Transaction that Merrill Lynch presented to the Company during the term of its engagement, a fee of $7,500,000 will be payable immediately in cash to Merrill Lynch. In no event
will the advisory fee (as described in this clause (6), clause (3) above and clause (8) below) total more than $7,500,000; 

  

	(7)	 If, during the period Merrill Lynch is retained by the Company or within one year thereafter, (a) a Business Combination or a Sale Transaction is consummated with a
Party or (b) the Company enters into an agreement which subsequently results in a Business Combination or a Sale Transaction, an additional fee in an amount customarily payable for the provision of similar services by a comparable investment bank
and as agreed between the Company and Merrill Lynch, payable in cash with 50% of such fee becoming payable upon the execution of a definitive agreement to effect a Business Combination or a Sale Transaction and the remainder upon closing of such
Business Combination or Sale Transaction or, in the case of a tender offer or exchange offer, upon the first purchase or exchange of shares pursuant to such tender offer or exchange offer, as the case may be. Notwithstanding the foregoing Merrill
Lynch shall not be entitled to and shall not receive any fees in connection with any Business Combination or Sale Transaction in the event that such transaction occurs after the completion of a Restructuring Transaction provided, however, that in
the event any Business Combination or Sale Transaction occurs after the completion of a Restructuring Transaction and is substantially similar to a proposal made, or if it is consummated with a party that Merrill Lynch presented to the Company
during the term of its engagement, then Merrill Lynch will receive fees in an amount customarily payable for the provision of similar services by a comparable investment bank and as agreed between the Company and Merrill Lynch, payable in cash with
50% of such fee becoming payable upon the execution of a definitive agreement to effect a Business Combination or a Sale Transaction and the remainder upon closing of such Business Combination or Sale Transaction or, in the case of a tender offer or
exchange offer executed as part of a Business Combination or Sale Transaction, upon the first purchase or exchange of shares pursuant to such tender offer or exchange offer, as the case may be. In addition, provided that in the event such a Business
Combination or Sale Transaction is not consummated 

  

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after the signing of a definitive agreement, then any fees paid to Merrill Lynch as a result of the execution of a definitive agreement pursuant to this
clause 7, during the period Merrill Lynch is retained by the Company or within one year thereafter, will be refunded to the Company by Merrill Lynch. It is further understood, that Merrill Lynch shall not be entitled to and shall not receive any
fees in connection with any sale of the Lehigh Valley cable systems or the Company’s Los Angles systems, unless otherwise agreed to in writing by the Company. It is further understood that these fee exemptions apply only to the sale of these
properties and does not pertain to any other transactions regarding these properties which may or may not occur; 

  

	(8)	If the Restructuring Transaction is to be effectuated as a 3(a)(9) Offer, whether or not as part of a Plan (as defined above), a fee of $7,500,000 shall be earned by Merrill Lynch
on the date that definitive 3(a)(9) Offer documents are first distributed to creditors whose claims would be affected thereby, and a Milestone fee of $1,000,000 will be payable to Merrill Lynch immediately upon the first mailing, delivery or other
dissemination of such definitive 3(a)(9) Offer documents and the remainder of such fee 90 days thereafter. In addition, if the Company terminates Merrill Lynch’s engagement then it is understood that Merrill Lynch’s fee, as described in
this clause 8, will be decreased to a total of $5,000,000 if definitive 3(a)(9) Offer documents, whether or not as part of a Plan, have been mailed, delivered or otherwise disseminated within one year of the termination of Merrill Lynch’s
engagement under this letter agreement. Notwithstanding the prior sentence, if a 3(a)(9) Offer, whether or not as part of a Plan, is consummated during the one-year period after the end of Merrill Lynch’s engagement hereunder and such
Restructuring Transaction is substantially similar to a proposal for a 3(a)(9) Offer that Merrill Lynch presented to the Company during the term of its engagement, a fee of $7,500,000 will be payable in cash to Merrill Lynch on the date such 3(a)(9)
Offer is consummated. 

  
 Notwithstanding anything
contained in clauses (1) through (8) to the contrary, immediately prior to the commencement of a case by or against the Company or any Controlled Subsidiary pursuant to the United States Bankruptcy Code, the Company and each Controlled Subsidiary,
unless prohibited by law, shall pay jointly and severally to Merrill Lynch (or cause Merrill Lynch to be paid) to the extent the Company or any Controlled Subsidiary shall have had notice of the pending commencement of such case, in cash, all
amounts that have been earned but are unpaid to Merrill Lynch pursuant to this letter agreement on such date, including without limitation, the fees referred to in clauses (1) through (8) above. 
  
 Notwithstanding anything contained in clauses (1) through (8) to the
contrary, the Company agrees that if, and at such time as it has obtained formal acceptance of a prepackaged plan required to enable such plan to be confirmed pursuant to Section 1129(a)(8) or 1129(b) of the United States Bankruptcy Code, or the
informal indications of support referred to above with respect to a prearranged plan, Merrill Lynch thereupon shall have completed all of the work contemplated to be performed by it in connection with this letter agreement and that all of the fees
payable pursuant to this letter agreement shall have been earned in full. It is intended by the parties hereto that if, notwithstanding the previous paragraph, any of Merrill Lynch’s expenses and fees and the expenses and fees of Merrill
Lynch’s counsel payable pursuant hereto remain unpaid at the time of such filing, such fees and expenses shall be in the nature of pre-petition claims for pre-petition services which shall be treated as unimpaired trade claims pursuant to such
plan. If requested by Merrill Lynch, the Company hereby agrees to include in the plan of reorganization submitted to the bankruptcy court, appropriate provisions designed to effectuate the parties’ intentions as described herein, unless Merrill
Lynch has been paid by the Controlled Subsidiaries for all of its expenses and fees and the expenses and fees of its counsel payable pursuant hereto. 
  
 If, during the period Merrill Lynch is retained by the Company, the Company or any Company Affiliate proposes to effect (a) any bridge or bank financing,
(b) any public offering or private placement of securities, or (c) any tender or repurchase of securities, recapitalization, extraordinary dividend, spin-off, divestiture or consent solicitation (in each case, other than pursuant to a 3(a)(9)
Offer), the Company agrees to engage, or cause to be engaged, Merrill Lynch as a bank agent, underwriter, placement agent, dealer-manager, repurchasing agent, arranger or principal counterparty or exclusive financial advisor, as the case may be, in
connection with such transaction on Merrill Lynch’s customary terms (including without limitation, as applicable, representations, warranties, covenants, conditions, indemnities and fees, such fees to be in accordance with any express fee
provisions herein) for such transaction at such time; provided, however, that Merrill Lynch may decline any such engagement in its sole and absolute discretion. In any case, any such engagement by Merrill Lynch shall only become a commitment by
Merrill Lynch to assume such engagement when such engagement is set forth and agreed to by Merrill Lynch in a separate underwriter, financing, placement agency, dealer-manager or other applicable type of agreement. 
  
 In addition to any fees that may be payable to Merrill Lynch under this
letter agreement, the Company and each Controlled Subsidiary, jointly and severally, agree to reimburse Merrill Lynch, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with Merrill Lynch’s
activities under this letter agreement. The Company and each Controlled Subsidiary, jointly and severally, agree to pay Shearman & Sterling, Merrill Lynch’s counsel, a retainer of $100,000 and agrees to pay Shearman & Sterling’s
reasonable fees and disbursements which shall be 

  

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billed monthly, in an itemized form reasonably acceptable to the Company, and which the Company and each Controlled Subsidiary agree to pay promptly and in
any event within 30 days. 
  
 The Company and each Controlled
Subsidiary will furnish Merrill Lynch (and will request that each prospective Party with which the Company or any Controlled Subsidiary enters into negotiations furnish Merrill Lynch) with such information as Merrill Lynch believes appropriate to
its assignment (all such information so furnished being the “Information”) and will update such Information as appropriate. The Company and each Controlled Subsidiary recognize and confirm that Merrill Lynch (a) will use and rely primarily
on the Information and on information available from generally recognized public sources in performing the services contemplated by this letter agreement without having independently verified the same, (b) does not assume responsibility for the
accuracy or completeness of the Information and such other information, (c) will not make an appraisal of any assets or liabilities of the Company and/or any Controlled Subsidiary or any prospective Party and does not assume responsibility as to the
solvency of, or issues relating to solvency concerning, the Company or any Controlled Subsidiary, and (d) with respect to any financial forecasts (including costs, savings and synergies) that may be furnished to or discussed with Merrill Lynch by
the Company, any Controlled Subsidiary or a Party, will assume that they have been reasonably prepared and reflect the best then currently available estimates and judgment of the Company’s, such Controlled Subsidiary’s or the Party’s
management. 
  
 In connection with engagements such as this, it is
Merrill Lynch’s policy to receive indemnification. The Company and each Controlled Subsidiary agree to the provisions with respect to the indemnification of Merrill Lynch and the other matters set forth in Annex A. Annex A is incorporated by
reference in its entirety into this letter. 
  
 Each of the
Company and the Controlled Subsidiaries acknowledges and agrees that Merrill Lynch has been retained to act solely as financial advisor to them. In such capacity, Merrill Lynch shall act as an independent contractor, and any duties of Merrill Lynch
arising out of its engagement pursuant to this letter agreement shall be owed solely to the Company and the Controlled Subsidiaries. 
  
 Merrill Lynch’s engagement hereunder shall terminate upon the earliest of (a) one year after the date hereof, unless extended in writing by Merrill
Lynch and the Company, (b) upon thirty days’ written notice from Merrill Lynch to the Company or from the Company to Merrill Lynch, or (c) such earlier date as may be mutually agreed in writing by Merrill Lynch and the Company, it being
understood that the provisions relating to the payment of fees and expenses, the agreement to retain Merrill Lynch for certain financing and other transactions, indemnification, limitations on the liability of Indemnified Parties, contribution,
settlements, the status of Merrill Lynch as an independent contractor, the limitation on to whom Merrill Lynch shall owe any duties and waiver of the right to trial by jury will survive any such termination. In the event that Merrill Lynch
terminates this engagement, without cause, Merrill Lynch agrees to waive its right to any fees as contemplated under this letter agreement that are payable but not yet due at the time of such termination. It is further understood that in the
event Merrill Lynch terminates this engagement without cause, under no circumstances, does Merrill Lynch waive its right to any earned fees and/or expenses due at the time of such termination. 
  
 The Company and each Controlled Subsidiary agree that, except as required by
applicable law, any reference to Merrill Lynch in any document prepared in connection with any activity referred to in this letter agreement or in any press release or other document or communication, is subject to the prior approval of Merrill
Lynch. 
  
 The Company and each Controlled Subsidiary acknowledge
that Merrill Lynch may, at its option and expense, place an announcement in such newspapers, periodicals and electronic medium as it may choose, stating that Merrill Lynch has acted as the exclusive financial advisor to the Company and the
Controlled Subsidiaries in connection with any Transaction. It is further understood that prior to any placement of the aforementioned announcement, Merrill Lynch will first be required to obtain the Company’s consent, which will not be
unreasonably withheld or delayed. 
  
 No waiver, amendment or
other modification of this letter agreement shall be effective unless in writing and signed by each party to be bound thereby. 
  
 This letter agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to
be performed in that state. 
  

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 This letter agreement embodies the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings, both written and oral, relating to the subject matter hereof, including without limitation, the letter agreement dated as of September 2, 2003 by and between Merrill Lynch and the Company (other
than the provisions with respect to the indemnification of Merrill Lynch and the other matters set forth in Annex A thereto, which will survive such supersession and continue to apply and remain in full force and effect in accordance with the terms
thereof). 
  
 Each of Merrill Lynch, the Company (in its own
behalf and, to the extent permitted by applicable law, on behalf of its shareholders) and the Controlled Subsidiaries waives all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise)
related to or arising out of the engagement of Merrill Lynch pursuant to, or the performance by Merrill Lynch of the services contemplated by, this letter agreement. 
  
 Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Merrill Lynch the duplicate
copy of this letter agreement enclosed herewith. 
  

			
	Very truly yours,
	
	 MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

		
	By	 	 /s/ Mark Bush

	 	 	

	 	 	 Mark Bush
 Director
 Investment Banking Group

  

			
	 Accepted and agreed
 to as of the date
first
 written above:

	
	RCN CORPORATION
	
	for itself and on behalf of each of its wholly owned and majority owned subsidiaries
		
	By	 	 /s/ Doug Bradbury

	 	 	

	 	 	 Doug Bradbury
 Executive Vice President

  

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 ANNEX A 
  
 The Company and each Controlled Subsidiary, jointly and severally, agree to indemnify Merrill Lynch and its affiliates and their respective directors,
officers, employees, agents and controlling persons (Merrill Lynch and each such person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party
may become subject under any applicable law, or otherwise, and related to, arising out of, or in connection with any Transaction contemplated by the engagement letter of which this Annex A is a part or the engagement of Merrill Lynch pursuant
thereto, and the performance by Merrill Lynch of the services contemplated thereby, and will reimburse each Indemnified Party for all expenses (including counsel fees and expenses) as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by or on behalf
of the Company or any Controlled Subsidiary. The Company and the Controlled Subsidiaries will not be liable under the foregoing to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court of competent
jurisdiction to have resulted from Merrill Lynch’s bad faith or gross negligence. 
  
 Each of the Company and the Controlled Subsidiaries also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company or the Controlled
Subsidiaries or their security holders or creditors related to, arising out of, or in connection with, any Transaction, the engagement of Merrill Lynch pursuant to, or the performance by Merrill Lynch of the services contemplated by, the engagement
letter except to the extent that any loss, claim, damage or liability is found in a final judgment by a court of competent jurisdiction to have resulted from Merrill Lynch’s bad faith or gross negligence. 
  
 If the indemnification of an Indemnified Party provided for in this letter
agreement is for any reason held unenforceable, although otherwise applicable in accordance with its terms, the Company and each Controlled Subsidiary, jointly and severally, agree to contribute to the losses, claims, damages and liabilities for
which such indemnification is held unenforceable (i) in such proportion as is appropriate to reflect the relative benefits to the Company and the Controlled Subsidiaries, on the one hand, and Merrill Lynch, on the other hand, of any contemplated
Transaction (whether or not such Transaction is consummated) or (ii) if (but only if) the allocation provided for in clause (i) is for any reason held unenforceable, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company and the Controlled Subsidiaries, on the one hand, and Merrill Lynch, on the other hand, as well as any other relevant equitable considerations. Each of the Company and the
Controlled Subsidiaries agrees that for the purposes of this paragraph the relative benefits to the Company and the Controlled Subsidiaries and Merrill Lynch of any contemplated Transaction (whether or not such Transaction is consummated) shall be
deemed to be in the same proportion that the total value received or contemplated to be received by the Company or the Controlled Subsidiaries or their security holders or the total value paid or contemplated to be paid by the Company and the
Controlled Subsidiaries, as the case may be, as a result of or in connection with the Transaction bears to the fees paid or to be paid to Merrill Lynch under this letter agreement; provided, however, that, to the extent permitted by
applicable law, in no event shall the Indemnified Parties be required to contribute an aggregate amount in excess of the aggregate fees actually paid to Merrill Lynch under the engagement letter of which this Annex A is a part. 
  
 Each of the Company and the Controlled Subsidiaries agrees that it will not,
without the prior written consent of Merrill Lynch, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which indemnification could be sought under this letter agreement
(whether or not Merrill Lynch or any other Indemnified Party is an actual or potential party to such claim, action or proceeding), unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all
liability arising out of such claim, action or proceeding. 
  
 If
Merrill Lynch or any other Indemnified Party is requested or required to appear as a witness in any action brought by or on behalf of or against the Company, any Controlled Subsidiary or a Purchaser in which such party is not named as a defendant,
the Company and each Controlled Subsidiary, jointly and severally, agree to reimburse Merrill Lynch for all expenses incurred in connection with such party’s appearing and preparing to appear as such a witness, including, without limitation,
the fees and disbursements of its legal counsel. 
  
 The
provisions of this Annex A shall continue to apply and shall remain in full force and effect regardless of any modification or termination of the engagement or engagement letter of which this Annex A is a part or the completion of Merrill
Lynch’s services hereunder. 
  

 8 

 ANNEX B 
  
 Debt Obligations 
  
 J.P. Morgan Credit Facility 
  
 Evergreen Credit Agreement 
  
 10% Senior Notes
due 2007 
  
 10-1/8% Senior Notes due 2010 
  
 9.80% Senior Discount Notes due 2008 
  
 11% Senior Discount Notes due 2008 
  
 11-1/8% Senior Discount Notes due 2007 
  

 9Key Employee Retention and Severance Plan

 Exhibit 10.22 
  
  
 RCN CORPORATION KEY EMPLOYEE RETENTION AND
SEVERANCE PLAN 
  

	1.	Applicability 

  
 The RCN Corporation Key Employee Retention and Severance Plan (the “Plan”) applies to eligible employees of RCN Corporation, a Delaware
corporation, and its subsidiaries (collectively, the “Company”). 
  

	2.	Purpose and Effective Date 

  
 (a) The purpose of this Plan is to encourage “Participants” (as defined in Section 3) to continue their employment with the Company during the
period of the Company’s restructuring by establishing a written Company policy governing the circumstances under which a Participant will be eligible to receive a Retention Bonus and Severance Benefits, subject to the terms and conditions of
the Plan. 
  
 (b) The Plan is adopted and effective as of February
10, 2004 (the “Effective Date”), unless a Chapter 11 case is filed, in which case the Plan shall be effective on the date specified in an order issued by the United States Bankruptcy Court having jurisdiction over the chapter 11 cases
currently pending with respect to the Company and certain of its affiliates (collectively, the “Chapter 11 Case”). 
  

	3.	Eligibility 

  
 Each employee of the Company who is set forth on Schedule A hereto as either a “Tier 1 Participant”, “Tier 2 Participant”, “Tier
3 Participant”, or Chief Executive Officer will be eligible to participate in the Plan (each a “Participant”) as set forth herein; provided, however, that such Schedule A may be amended any time during the duration of
the Plan in order to replace any employee of the Company who voluntarily terminates employment with the Company or whose employment is terminated by the Company for Cause. Each Participant shall receive written notification, as soon as practicable
after the Effective Date, of such Participant’s Retention Bonus under the Plan. 
  

	4.	Retention Bonuses 

  
 (a) General Retention Bonuses. Subject to Section 4(c) below, Retention Bonuses shall be paid as follows: 
  
 (i) Tier 1 and Tier 2 Participants. Provided they
remain continuously employed by the Company through the relevant payment date set forth below, Tier 1 Participants and Tier 2 Participants will receive (A) twenty-five percent (25%) of their Retention Bonuses on the earlier of (I) ninety (90) days
after the Effective Date, or 

 (II) upon confirmation of a Chapter 11 plan in the Chapter 11 Case (the “First Payment Date”)
and (B) fifty percent (50%) of their Retention Bonuses the earlier of (I) consummation of a comprehensive financial restructuring (II) upon consummation of a Chapter 11 plan in the Chapter 11 Case (the “Second Payment Date”). 

 
 (ii) Tier 3 Participants. Provided they remain
continuously employed by the Company through the relevant payment date set forth below, Tier 3 Participants will receive (A) fifty percent (50%) of their Retention Bonuses upon the First Payment Date and (B) fifty percent (50%) of their Retention
Bonuses upon the Second Payment Date. 
  
 (iii)
Chief Executive Officer. Provided he remains continuously employed by the Company through the payment date, the Chief Executive Officer will receive seventy five (75%) of his Retention Bonus upon the Second Payment Date. 
  
 (b) Performance Component of Retention Bonuses. In the event the
performance conditions referred to below are met and the Participant remains continuously employed by the Company through the payment date, an additional portion of the Retention Bonuses shall be paid as set forth in this Section 4(b). In the event
the applicable performance conditions are not met, no additional portion of the Retention Bonuses shall be paid under this Section 4(b). Provided the operational targets established by the Company [operational targets are to be determined] for the
Participant are met and the Participant remains continuously employed by the Company through the payment date, an additional twenty five percent (25%) of the Retention Bonuses shall be paid to the Tier 1 Participants, Tier 2 Participants and the
Chief Executive Officer upon the Second Payment Date. 
  
 (c)
Termination of Employment Prior To Payment of Retention Bonuses. In the event a Participant’s employment with the Company is terminated on account of his or her death or “Disability” (as defined in the Company’s
long-term disability insurance plan), by the Company without “Cause” (as defined below), or by the Participant due to a material reduction in base salary, in each case prior to one of the payment dates in Section 4(a) above but following
the Effective Date, such Participant (or, in the case of death, his or her estate) shall be entitled to receive at the times such amounts would have been paid if the Participant’s employment had not terminated, the full amount of the Retention
Bonus payable to him or her under Section 4(a) (but not any amount payable under Section 4(b)). 
  
 (d) Definitions. 
  
 (i) “Base Salary” shall mean base salary as of the Effective Date (or with respect to any Participant who began
participation in the Plan after the Effective Date, such Participant’s base salary on the first day of such Participant’s participation in the Plan), excluding shift premiums, overtime, bonuses, commissions, other special payments or any
other allowance. 
  
 (ii)
“Cause” shall mean where the Participant has (A) repeatedly refused or failed to perform the material duties assigned to him/her; (B) engaged in a willful or 
  

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 intentional act that is materially injurious to the Company; (C) continually or
repeatedly been absent from the Company, unless due to serious illness or disability; (D) used illegal drugs or been impaired due to other substances; (E) been convicted of any felony; (F) committed an act of gross misconduct, fraud, embezzlement or
theft against the Company; or (G) violated a material Company policy that results in a material injury to the Company. 
  
 (iii) “Good Reason” shall mean (A) where there has been a material adverse diminution of any material duties or
responsibilities of the Participant; (B) any failure of the Company to comply with the provisions of this Plan; (C) a material reduction in the Participant’s Base Salary or annual bonus opportunity; or (D) a change in the Participant’s
primary work location in excess of 75 miles from the Participant’s primary work location on the Effective Date (or with respect to any Participant who began participation in the Plan after the Effective Date, such Participant’s primary
work location on the first day of such Participant’s participation in the Plan). 
  
 (iv) “Retention Bonus” shall mean: 
  

	 	(A)	with respect to the Chief Executive Officer, an aggregate amount equal to 120% of his Base Salary; 

  

	 	(B)	with respect to Tier 1 Participants, an aggregate amount equal to 80% of the Participant’s Base Salary; 

  

	 	(C)	with respect to Tier 2 Participants an aggregate amount equal to 50% of the Participant’s Base Salary; and 

  

	 	(D)	with respect to Tier 3 Participants, an aggregate amount determined by the Chief Executive Officer and communicated to such Participant which shall be between 10% and 25% of the
Participant’s Base Salary. 

  

	5.	Severance Benefits. 

  
 (a) Tier 1 Participants, Tier 2 Participants and the Chief Executive Officer shall be entitled to the Severance Benefits set forth in Section 5(c) below
in the event that such Participant’s employment with the Company is terminated after the Effective Date and on or prior to the first anniversary of the Second Payment Date (i) by the Company without Cause and not due to such Participant’s
death or Disability, or (ii) by the Participant for Good Reason; provided, however, that the Severance Benefits shall be payable only if the Participant executes, and fails to revoke within the statutory revocation period, a release
following termination of employment which is, in form and substance, satisfactory to the Company. 
  
 (b) Tier 3 Participants shall be entitled to the Severance Benefits set forth in Section 5(c)(i) below if their employment with the Company is terminated
after the Effective Date and on or prior to the date which is either twelve months or six months (as determined by the 
  

 -3- 

 CEO) following the Second Payment Date, by the Company other than for Cause and not due to the Participant’s
Disability or death; provided, however, that the Severance Benefits shall be payable only if the Participant executes, and fails to revoke within the statutory revocation period, a release following termination of employment which is,
in form and substance, satisfactory to the Company. 
  
 (c) The
Severance Benefits shall be as follows: 
  
 (i)
The Company shall pay to the Participant an amount equal to the Participant’s base salary, at the rate in effect at the time of termination of his or her employment, to be paid in accordance with Company’s normal payroll practices and
periods for the duration of the Severance Period (as defined below). 
  
 (ii) The Company shall continue to cover the Participant (other than a Tier 3 Participant) and his or her dependents under, or provide such Participant and his or her dependents with insurance coverage no less
favorable than, the Company’s health and dental benefit plans or programs (as in effect on the day immediately preceding the date of termination of employment) for a period equal to the lesser of (A) the Severance Period (as defined above) or
(B) until such Participant is provided benefits by another employer that are substantially comparable (with no preexisting condition limitations) to the benefits provided by such plans or programs. To the extent any such benefits cannot be provided
under the benefit plans or programs of the Company or any of its subsidiaries, the Participant will be entitled to receive, on a monthly basis following termination, cash payments in an amount equal to the monthly cost of such benefits. 

 
 (d) For purposes hereof the “Severance Period” will be as
follows: 
  
 (i) for the Chief Executive Officer,
24 months; 
  
 (ii) for Tier 1 Participants, 12
months; 
  
 (iii) for Tier 2 Participants, 6
months; and 
  
 (iv) for Tier 3 Participants, a
period determined by the Chief Executive Officer which shall be from four to six months. 
  

	6.	Administration 

  
 (a) The Plan shall be administered by the Compensation Committee of the Company’s Board of Directors (the “Committee”). 
  
 (b) Subject to the express provisions of this Plan, the Committee shall have
sole authority to interpret the Plan and to make all other determinations deemed necessary or advisable for the administration of the Plan. All determinations and interpretations of the Committee shall be in its discretion and shall be final,
binding and conclusive as to all persons. 
  

 -4- 

 Neither the Committee nor any employee, officer or director of the Company shall be personally liable by reason of any
action taken with respect to the Plan for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each employee, officer or director of the Company, including the members of the Committee, to whom any duty or
power relating to the administration or interpretation of the Plan may be allocated or delegated, against any reasonable cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the
Board of Directors of the Company (the “Board”)) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud, bad faith or gross negligence. 
  

	7.	General Provisions 

  
 (a) Company Obligation. Payments under this Plan shall be paid by the Company from its general assets; provided, however, that no
director, officer or employee of the Company shall be personally liable in the event the Company is unable to make any payments under this Plan due to a lack of, or inability to access, funding or financing, legal prohibition (including statutory or
judicial limitations) or failure to obtain any required consent. Notwithstanding anything in this Plan to the contrary, any payment to be made hereunder shall only be made as and to the extent the Company has adequate funding therefor. 

 
 (b) Withholding. Payments under this Plan are subject to Federal,
state and local income tax withholding and all other applicable Federal, state and local taxes. The Company shall withhold, or cause to be withheld, from any payments made hereunder all applicable Federal, state and local withholding taxes and may
require the employee to file any certificate or other form in connection therewith. 
  
 (c) No Right to Continued Employment. Nothing contained herein shall give any employee the right to be retained in the employment of the Company or any successor thereto, or affect the Company’s right to
dismiss any employee at will. 
  
 (d) Non-Assignable. No
person having a benefit under this Plan may assign, transfer or in any other way alienate the benefit, nor shall any benefit under this Plan be subject to garnishment, attachment, execution or levy of any kind. 
  
 (e) Not Compensation for Benefit Plan Purposes. Benefits paid under
this Plan shall not be used to determine benefit amounts under any of the Company’s other benefit programs. 
  
 (f) Applicable Law. This Plan and all action taken under it shall be governed as to validity, construction, interpretation and administration by
the laws of the State of New York and applicable Federal law, without regard to the principles of conflict of laws thereof. 
  
 (g) Amendment or Termination. The Board may amend, suspend or terminate the Plan or any portion thereof at any time; provided,
however, that unless the written consent of a Participant is obtained, no such amendment or termination shall adversely affect the rights of such Participant. During the pendency of the Chapter 11 Case, no amendment or modification of the
Plan that materially increases the cost of the Plan to the Company shall be adopted 
  

 -5- 

 without formal authorization from the Board and thereafter, the Bankruptcy Court upon notice. 
  
 (h) Severability. In the event any provision of the Plan shall be held
invalid or illegal for any reason, any such illegality or invalidity shall not affect the remaining parts of the Plan. In such case, the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted, and the
Company shall have the privilege and opportunity to correct and remedy such questions or illegality or invalidity by amendment as provided in the Plan. 
  

	8.	ERISA Provisions. The portion of the Plan providing Severance Benefits shall be subject to the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”). 

  
 (a) Plan Year. The
“Plan Year” of this Plan shall be the calendar year. 
  
 (b) Plan. “Plan” shall mean this RCN Corporation Key Employee Retention and Severance Plan. 
  
 (c) Named Fiduciary. The Company is the sponsor and the named fiduciary of the Plan. 
  
 (d) Claims Procedure. 
  
 (i) Claims for Severance Benefits under this Plan shall be made in writing to the Company. 
  
 (ii) If such claim for benefits is wholly or partially
denied, the Company shall, within a reasonable period of time, but generally no later than sixty (60) days after receipt of the claim, notify the claimant of the denial of the claim. However, if the Company determines that an extension of time for
processing is required, notice of the extension shall be furnished to the claimant prior to the termination of the initial 60-day period. In no event shall such extension exceed a period of 60 days from the end of the initial period, and the
extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefit determination. Notice of denial (A) shall be in writing or in electronic form complying with the
standards imposed by 29 CFR 2520.104b-1(c)(1), and (B) shall set forth in a manner calculated to be understood by the claimant (I) the specific reason or reasons for denial of the claim, (II) a specific reference to the pertinent Plan provisions
upon which the denial is based, (III) a description of any additional material or information necessary for the claimant to perfect the claim, along with an explanation why such material or information is necessary, and (IV) an explanation of the
Plan’s claim review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review.

  

 -6- 

 (iii) Within sixty (60) days following the receipt by the claimant of the notice of
denial of the claim as set forth above, or if the claim has not been granted within a reasonable period of time, the claimant may file a written request with the Company that it conduct a full and fair review of the denial of the claimant’s
claim for benefits, including conducting a hearing, if deemed necessary by the Company. In connection with the claimant’s appeal of the denial of his or her benefit, the claimant may submit written comments, documents, records, and other
information relating to the claim for benefits. The claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits.
The review shall take into account all comments, documents, records and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

  
 (iv) The Company shall deliver to the
claimant a written or electronic decision (in compliance with the standards set forth above) on the claim within a reasonable period of time, but not later than sixty (60) days, after the receipt of the claimant’s request for review, except if
the Company determines that there are special circumstances (such as the need to hold a hearing, if necessary) that require an extension of time for processing, the aforesaid sixty (60) day period shall be extended to one hundred twenty (120 ) days
and the extension notice shall indicate the special circumstances and the date by which the Plan expects to render the determination on review. In the case of an adverse determination on review, the decision shall set forth in a manner calculated to
be understood by the claimant, (A) the specific reasons for the adverse determination, (B) specific references to the pertinent Plan provisions upon which the decision is based, (C) a statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits, and (D) a description of any voluntary appeal procedures offered by the Plan and the
claimant’s right to obtain information about such procedures, as well as a statement of the claimant’s right to bring an action under Section 502(a) of ERISA. 
  
 IN WITNESS WHEREOF, the Company has caused the Plan to be executed as of the 10th day of February, 2004. 
  

			
	
	 RCN CORPORATION

		
	By:	 	 
	 	 	

	 	 	 

  

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