Exhibit 10.1

Form of Non-Qualified Stock Option Agreement for Directors

DSL.NET, INC.
 
NON-QUALIFIED STOCK OPTION AGREEMENT
 
1. Grant of Option.
 
DSL.NET, INC., a Delaware corporation (the “Company”), hereby grants to [NAME OF
DIRECTOR] (the “Participant”), an option, pursuant to the Company’s Amended and
Restated 2001 Stock Option and Incentive Plan (the “Plan”), to purchase an
aggregate of _______________ shares of Common Stock, par value $.0005 per share
(“Common Stock”), of the Company at a price of $______ per share, purchasable as
set forth in and subject to the terms and conditions of this option agreement
and the Plan. The original date of grant of this option is ___________, and is
hereinafter referred to as the “Original Grant Date,” and the date ending one
hundred and twenty (120) months thereafter is herein referred to as the “Tenth
Anniversary Date.”
 
2. Exercise of Option and Provisions for Termination.
 
(a) Except as otherwise provided herein and subject to the right of cumulation
provided herein, this option may be exercised, prior to the Tenth Anniversary
Date, as to not more than the following number of shares of Common Stock covered
by this option during the respective periods set forth as follows: (i) none of
the shares of Common Stock covered by this option prior to _____________, (ii)
2.77777% of the shares of Common Stock covered by this option from and after
__________________, and (iii) an additional 2.77777% of the shares of Common
Stock covered by this option on each monthly anniversary of the Original Grant
Date thereafter, until fully vested, provided, however, that in the event there
is no corresponding monthly anniversary date in any given month, such additional
amount shall vest on the last day of such month (i.e., February 29 would
correspond to January 31). 
 
Notwithstanding anything herein to the contrary, in the event of a
Change-in-Control (as defined in Section 11(b) of the Plan), any portion of the
option granted to the Participant hereunder which would otherwise vest or become
exercisable solely with the passage of time and the Participant’s continued
service as a director of the Company, shall immediately vest and become fully
exercisable.
 
The right of exercise provided herein shall be cumulative so that if the option
is not exercised to the maximum extent permissible during any period, it shall
be exercisable, in whole or in part, with respect to all shares not so purchased
at any time during any subsequent period prior to the expiration or termination
of this option.
 
This option may not be exercised at any time after the Tenth Anniversary Date.
 
(b) Subject to the conditions hereof, this option shall be exercisable by the
Participant giving written notice of exercise to the Company, specifying the
number of shares to be purchased and the purchase price to be paid therefor and
accompanied by payment in accordance with Section 3 hereof. Such exercise shall
be effective upon receipt by the Treasurer of the Company of the written notice
together with the required payment. The Participant shall be entitled to
purchase less than the number of shares covered hereby, provided that no partial
exercise of this option shall be for less than 10 whole shares.
 

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(c) Subject to the provisions of Section 11 of the Plan, if the Participant
ceases service as a director of the Company, for any reason, including
retirement but other than death, this option shall immediately terminate;
provided, however, that any portion of this option which was otherwise
exercisable on the date of termination of the Participant’s service to the
Company may be exercised within the three-month period following the date on
which the Participant ceased to so serve, but in no event after the Tenth
Anniversary Date. Any such exercise may be made only to the extent of the number
of shares subject to this option which are purchasable upon the date of such
termination of service to the Company. If the Participant dies during such
three-month period, this option shall be exercisable by the Participant’s
personal representatives, heirs or legatees to the same extent and during the
same period that the Participant could have exercised this option upon the date
of his or her death.
 
(d) If the Participant dies while serving as a director of the Company, this
option shall be exercisable, by the Participant’s personal representatives,
heirs or legatees, to the same extent that the Participant could have exercised
this option on the date of his or her death. This option or any unexercised
portion hereof shall terminate unless so exercised prior to the earlier of the
expiration of six months from the date of such death or ten years and one month
from the date of its grant.
 
3. Payment of Purchase Price.
 
(a) Payment of the purchase price for shares purchased upon exercise of this
option shall be made by one or any combination of the following forms of
payment:
 

(i)
by delivery to the Company of cash or check payable to the order of the Company
in an amount equal to the purchase price of such shares;

 

 
(ii)
if the Participant elects and the Company permits, subject to Section
3(b) below, by delivery of shares of Common Stock of the Company having a fair
market value equal in amount to the purchase price of such shares; or

 

 
(iii)
if the Participant elects and the Company permits, and the Common Stock is then
traded on a national securities exchange or on the Nasdaq National Market (or
successor trading system), by delivery of an irrevocable and unconditional
undertaking, satisfactory in form and substance to the Company, by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price, or delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions, satisfactory in form and substance
to the Company, to a creditworthy broker to deliver promptly to the Company cash
or a check sufficient to pay the exercise price.

(b) If Section 3(a)(ii) is applicable, and if the Participant delivers Common
Stock held by the Participant (“Old Stock”) to the Company in full or partial
payment of the exercise price and the Old Stock so delivered is subject to
restrictions or limitations imposed by agreement between the Participant and the
Company, an equivalent number of shares of Common Stock issued upon exercise of
this option shall be subject to all restrictions and limitations applicable to
the Old Stock to the extent that the Participant paid for the option shares by
delivery of Old Stock, in addition to any restrictions or limitations imposed by
this Agreement. Notwithstanding the foregoing, the Participant may not pay any
part of the exercise price hereof by transferring Common Stock to the Company
unless such Common Stock has been owned by the Participant free of any
substantial risk of forfeiture for at least six months.
 
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(c) For the purposes of Section 3(a)(ii) hereof, the fair market value of any
share of the Company’s Common Stock to be delivered to the Company in exercise
of this option shall be determined as of the last business day for which such
prices or quotes are available prior to the date of exercise and shall mean (i)
the last reported sale price (on that date) of the Common Stock on the principal
national securities exchange on which the Common Stock is traded, if the Common
Stock is then traded on a national securities exchange; (ii) the last reported
sale price (on that date) of the Common Stock on the Nasdaq National Market (or
successor trading system), if the Common Stock is not then traded on a national
securities exchange; or (iii) if the stock is not then traded on a national
securities exchange or listed on the Nasdaq National Market (or successor
trading system), the fair market value as determined in good faith by the Board
of Directors of the Company, in accordance with the terms of the Plan.
 
(d) If the Participant elects to exercise options by delivery of shares of
Common Stock of the Company, the certificate or certificates representing the
shares of Common Stock of the Company to be delivered shall be duly executed in
blank by the Participant or shall be accompanied by a stock power duly executed
in blank suitable for purposes of transferring such shares to the Company.
Fractional shares of Common Stock of the Company will not be accepted in payment
of the purchase price of shares acquired upon exercise of this option.
 
4. Delivery of Shares.

The Company shall, upon payment of the purchase price for the number of shares
purchased and paid for, make prompt delivery of such shares to the Participant,
provided that if any law or regulation requires the Company to take any action
with respect to such shares before the issuance thereof, then the date of
delivery of such shares shall be extended for the period necessary to complete
such action. No shares shall be issued and delivered upon exercise of any option
unless and until, in the opinion of counsel for the Company, any applicable
registration requirements of the Securities Act of 1933, any applicable listing
requirements of any national securities exchange or market on which stock of the
same class is then listed, and any other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery, shall
have been fully complied with.

5. Non-transferability of Option.
 
Except as provided in Section 2(c) and Section 2(d) hereof, this option is
personal and no rights granted hereunder shall be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise) nor shall
any such rights be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this
option or of such rights contrary to the provisions hereof, or upon the levy of
any attachment or similar process upon this option or such rights, this option
and such rights shall become null and void.

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6. No Special Rights.

Nothing contained in the Plan or this Agreement shall be construed or deemed by
any person under any circumstances to bind the Company or any of its
subsidiaries or the Company’s Board of Directors, or any persons or parties
holding voting rights with respect to the election of directors of the Company
to continue the services of the Participant as a director of the Company or any
of its subsidiaries for the period within which this option may be exercised.
However, during the period of the Participant’s service as a director to the
Company or any of its subsidiaries, the Participant shall render diligently and
faithfully the director duties required by the Participant by applicable law on
behalf of the Company and its subsidiaries and shall at no time take any action
which directly or indirectly would be inconsistent with the best interests of
the Company or of its subsidiaries.

7. Rights as a Stockholder.

The Participant shall have no rights as a stockholder with respect to any shares
which may be purchased by exercise of this option unless and until a certificate
or certificates representing such shares are duly issued and delivered to the
Participant. Except as otherwise expressly provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record date is prior
to the date such stock certificate is issued.

8. Recapitalization.

In the event that dividends are payable in shares of Common Stock or in the
event there are splits, sub-divisions or combinations of shares of Common Stock
subsequent to the date hereof, the number of shares subject to this option shall
be increased or decreased proportionately, as the case may be, and the number of
shares deliverable upon the exercise thereafter of this option shall be
increased or decreased proportionately, as the case may be, without change in
the aggregate purchase price.

9. Reorganization.

In case the Company is merged or consolidated with another corporation or entity
and the Company is not the surviving corporation, or in case the property or
stock of the Company is acquired by any other corporation, or in case of a
reorganization or liquidation of the Company, prior to the termination or
expiration of this option, the Participant shall, with respect to this option or
any unexercised portion thereof, be entitled to the rights and benefits, and be
subject to the limitations, set forth in Section 11 of the Plan and Section 2
hereof.

10.  Withholding Taxes.

Whenever shares are to be issued upon exercise of this option, the Company shall
have the right to require the Participant to remit to the Company an amount
sufficient to satisfy any federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such shares.

11.  Miscellaneous.

(a) Except as provided herein, this Agreement may not be amended or otherwise
modified unless evidenced in writing and signed by the Company and the
Participant.
 
(b) All notices under this Agreement shall be mailed or delivered by hand to the
parties at their respective addresses set forth beneath their names below or at
such other address as may be designated in writing by either of the parties to
one another.
 
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(c) This Agreement shall be governed by and construed in accordance with the
laws of the State of Connecticut.
 
 

      Dated:  DSL.NET, INC.  
   
   
  By:  

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Name:   Title        Address:  545 Long Wharf Drive   New Haven, Connecticut
06511 

         

 
 

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PARTICIPANT’S ACCEPTANCE
 
The undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof.
 

        PARTICIPANT  
   
   
   

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Signature
 

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 Address:  

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