WWW.EXFILE.COM, INC. -- 13922 -- DSL.NET, INC. -- EXHIBIT 10.2 TO FORM 10-Q


    EXHIBIT
      10.2



    THIS
      SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
      COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
      EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
      “SECURITIES ACT”), AND,
      ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

     

    THIS
      SECURITY IS SUBORDINATE TO THE RIGHTS OF LAURUS MASTER FUND, LTD.
      (“LAURUS”) AS SET FORTH IN THAT
      CERTAIN SUBORDINATION AGREEMENT EXECUTED BY LAURUS IN CONNECTION WITH THE
      TRANSACTIONS CONTEMPLATED HEREBY.

     

    Original
      Issue Date: November 2,
      2005

    $8,000,000.00

     

    18%
      SECURED DEBENTURE

    DUE
      AUGUST 2, 2006

     

    THIS
      SECURED DEBENTURE is one of a series of duly authorized and issued Secured
      Debentures of DSL.net, Inc., a Delaware corporation, having a principal place
      of
      business at 545 Long Wharf Drive, 5th Floor, New Haven, CT 06511 (the
“Company”), designated as its 18% Secured Debenture, due August
      2, 2006
      (this debenture, the “Debenture” and collectively with the other such
      series of debentures, the “Debentures”).

     

    FOR
      VALUE
      RECEIVED, the Company promises to pay to DunKnight Telecom Partners LLC or
      its
      registered assigns (the “Holder”), or shall have paid pursuant to the
      terms hereunder, the principal sum of $8,000,000 United States Dollars by August
      2, 2006, or such earlier date as this Debenture is required or permitted to
      be
      repaid as provided hereunder (the “Maturity Date”), and to pay interest
      to the Holder on the aggregate amount and then outstanding principal amount
      of
      this Debenture in accordance with the provisions hereof. This Debenture is
      subject to the following additional provisions:

     

    Section
      1.        Definitions.
      For the purposes hereof, in addition
      to the terms defined elsewhere in this Debenture: (a) capitalized terms not
      otherwise defined herein have the 

     

     

     

    
      1

      
        

      

    

     

    meanings
      given to such terms in the Purchase Agreement, and (b) the
      following terms shall have the following meanings:

     

    “Business
      Day” means any
      day except Saturday, Sunday and any day which shall be a federal legal holiday
      in the United States or a day on which banking institutions in the State of
      New
      York are authorized or required by law or other government action to
      close.

     

    “Change
      of Control Transaction” means the occurrence after the date hereof of any
      of (i) an acquisition
      after the date hereof by an individual or legal entity or “group” (as described
      in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control
      (whether through legal or beneficial ownership of capital stock of the Company,
      by contract or otherwise) of in excess of 33% of the voting securities of the
      Company, or (ii) the Company merges into or consolidates with any other Person,
      or any Person merges into or consolidates with the Company and, after giving
      effect to such transaction, the stockholders of the Company immediately prior
      to
      such transaction own less than in excess of 66% of the aggregate voting power
      of
      the Company or the successor entity of such transaction, or (iii) the Company
      sells or transfers its assets, as an entirety or substantially as an entirety,
      to another Person and the stockholders of the Company immediately prior to
      such
      transaction own less than 33% of the aggregate voting power of the acquiring
      entity immediately after the transaction, or (iv) a replacement at one time
      or
      within a three year period of more than one-half of the members of the Company’s
      board of directors which is not approved by a majority of those individuals
      who
      are members of the board of directors on the date hereof (or by those
      individuals who are serving as members of the board of directors on any date
      whose nomination to the board of directors was approved by a majority of the
      members of the board of directors who are members on the date of their
      respective nominations), or (v) the execution by the Company of an agreement
      to
      which the Company is a party or by which it is bound, providing for any of
      the
      events set forth above in (i) through (iv); provided, however,
      a Change of Control Transaction shall
      not include any change of control which involves the Holder or its affiliates
      or
      co-Holders, including, without limitation, DunKnight Telecom Partners
      LLC.

     

    “Common
      Stock” means the
      common stock, par value $0.0005 per share, of the Company and stock of any
      other
      class of securities into which such securities may hereafter have been
      reclassified or changed into.

     

    “Debenture
      Register” shall
      have the meaning set forth in Section 2(b).

     

    “Event
      of Default” shall
      have the meaning set forth in Section 8.

     

    “Exchange
      Act” means the
      Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Late
      Fees” shall have the
      meaning set forth in Section 2(c).

     

     

     

    
      2

      
        

      

    

     

     

    “Mandatory
      Default Amount”
      shall equal the sum of (i) 112% of the principal amount of this Debenture to
      be
      prepaid, plus (ii) all accrued and unpaid interest thereon plus (iii) all other
      amounts, costs, expenses and liquidated damages due in respect of this
      Debenture.

     

    “New
      York Courts” shall
      have the meaning set forth in Section 11(d).

     

    “Original
      Issue Date”
      shall mean the date of the first issuance of the Debentures regardless of the
      number of transfers of any Debenture and regardless of the number of instruments
      which may be issued to evidence such Debenture.

     

    “Permitted
      Indebtedness”
      shall mean (a) indebtedness existing on the Original Issue Date, (b) lease
      obligations and purchase money indebtedness of up to $150,000, in the aggregate,
      incurred in connection with the acquisition of capital assets and lease
      obligations with respect to newly acquired or leased assets, (c) trade accounts
      payable, letters of credit and surety bonds incurred or issued in the ordinary
      course of business and (d) guaranties by endorsement of negotiable instruments
      for deposit or collection or similar transaction in the ordinary course of
      business.

     

    “Permitted
      Lien” shall
      mean and include: (i) Liens for taxes or other governmental charges
      not at
      the time delinquent or thereafter payable without penalty or being contested
      in
      good faith; (ii) Liens of carriers, warehousemen, mechanics, materialmen,
      vendors, and landlords incurred in the ordinary course of business for sums
      not
      overdue or being contested in good faith; (iii) deposits under workers’
      compensation, unemployment insurance and social security laws or to secure
      the
      performance of bids, tenders, contracts (other than for the repayment of
      borrowed money) or leases, or to secure statutory obligations of surety or
      appeal bonds or to secure indemnity, performance or other similar bonds in
      the
      ordinary course of business; (iv) easements, reservations, rights of
      way,
      restrictions, minor defects or irregularities in title and other similar charges
      or encumbrances affecting real property in a manner not materially or adversely
      affecting the value or use of such property; (v)  Liens in favor of
      the
      Agent, (vi) Liens in favor of Laurus as provided for in that certain Security
      Agreement, dated August 31, 2004, as amended (the “Laurus
      Security Agreement”); (vii)  Liens securing
      obligations under a capital lease if such lease is permitted under this
      Agreement and such Liens do not extend to property other than the property
      leased under such capital lease; (viii) Liens upon any equipment or
      other
      assets acquired or held by the Company or any of its subsidiaries to secure
      the
      purchase price of such equipment or other assets or indebtedness incurred solely
      for the purpose of financing the acquisition of such equipment or other assets,
      so long as such Lien extends only to the equipment or other assets financed,
      and
      any accessions, replacements, substitutions and proceeds (including insurance
      proceeds) thereof or thereto; and (ix) cash collateral securing letters of
      credit.

     

     

     

     

    
      3

      
        

      

    

     

     

    “Person”
      means a
      corporation, an association, a partnership, organization, a business, an
      individual, a government or political subdivision thereof or a governmental
      agency.

     

    “Purchase
      Agreement” means
      the Securities Purchase Agreement, dated as of November 2, 2005 to which the
      Company and the original Holder are parties, as amended, modified or
      supplemented from time to time in accordance with its terms.

     

    “Securities
      Act” means the
      Securities Act of 1933, as amended, and the rules and regulations promulgated
      thereunder.

     

    “Subsidiary”
      shall have
      the meaning given to such term in the Purchase Agreement.

     

    “Trading
      Day” means a day
      on which the Common Stock is traded on a Trading Market.

     

    “Trading
      Market” means the
      following markets or exchanges on which the Common Stock is listed or quoted
      for
      trading on the date in question: the Nasdaq SmallCap Market, the American Stock
      Exchange, the New York Stock Exchange, the Nasdaq National Market or the OTC
      Bulletin Board or the Pink Sheets.

     

    “Transaction
      Documents”
      shall have the meaning set forth in the Purchase Agreement.

     

    
      	
               

            	
              Section
                2.

            	
              Interest.

            


    

     

    a)            Payment
      of Interest in Cash. The Company shall
      pay interest to the Holder on the outstanding principal amount of this Debenture
      at the rate of 18% per annum, payable monthly beginning on the first of the
      month following the Original Issue Date, and on the Maturity Date (except that,
      if any such date is not a Business Day, then such payment shall be due on the
      next succeeding Business Day) (each such date, an “Interest Payment Date”) in United States
      dollars.

     

    b)            Interest
      Calculations. Interest shall be
      calculated on the basis of a 360-day year and for the actual number of days
      elapsed commencing on the Original Issue Date until payment in full of the
      principal sum, together with all accrued and unpaid interest and other amounts
      which may become due hereunder, has been made. Interest hereunder will be paid
      to the Person in whose name this Debenture is registered on the records of
      the
      Company regarding registration and transfers of this Debenture (the
“Debenture Register”).


     

    c)            Late
      Fee. All overdue accrued and unpaid interest
      to be paid hereunder shall entail a late fee, in addition to the interest due
      and payable hereunder, at the rate of 10.50% per annum on the outstanding
      interest amount (or such lower maximum amount 

     

     

     

    
      4

      
        

      

    

     

    of
      interest permitted to be charged under applicable law)
      (“Late Fees”) which will accrue
      on the basis of a 360 day year and for the actual number of days elapsed, from
      the date such interest is due hereunder through and including the date of
      payment.

     

    d)            Prepayment.
      The Company may prepay all, but not
      part, of the principal amount of this Debenture without the prior written
      consent of the Holder and without penalty or premium. All accrued and unpaid
      interest will be paid on the prepayment date.

     

    
      	
               

            	
              Section
                3.

            	
              Registration
                of Transfers and Exchanges.

            


    

     

    a)            Different
      Denominations. This Debenture is
      exchangeable for an equal aggregate principal amount of Debentures of different
      authorized denominations of at least $100,000, as requested by the Holder
      surrendering the same. No service charge will be made for such registration
      of
      transfer or exchange. Notwithstanding the foregoing, without the prior written
      consent of the Company no transfer of this Debenture shall be made if, after
      such transfer, there shall exist more than 10 Holders of Debentures.

     

    b)            Investment
      Representations. This Debenture has
      been issued subject to certain investment representations of the original Holder
      set forth in the Purchase Agreement and may be transferred or exchanged only
      in
      compliance with the Purchase Agreement and applicable federal and state
      securities laws and regulations.

     

    c)            Reliance
      on Debenture Register. Prior to due
      presentment to the Company for transfer of this Debenture, the Company and
      any
      agent of the Company may treat the Person in whose name this Debenture is duly
      registered on the Debenture Register as the owner hereof for the purpose of
      receiving payment as herein provided and for all other purposes, whether or
      not
      this Debenture is overdue, and neither the Company nor any such agent shall
      be
      affected by notice to the contrary.

     

    Section
      4.       Special
      Provisions Relative to Refinancing Transactions and Laurus
      Drawdowns. Notwithstanding anything in this Debenture or
      any of the other Transaction Documents to the contrary, nothing herein or
      therein shall prohibit, limit or restrict in any way, the Company’s repurchase
      or repayment of the Company’s preferred stock, warrants to purchase common stock
      and/or debt instruments held by Deutsche Bank AG London and/or certain
      affiliated Vantage Point Venture Partners entities and, notwithstanding any
      other provision in this Debenture or any other Transaction Document, the
      consummation of such transactions shall not constitute a breach or Event of
      Default hereunder or under any Transaction Document. Notwithstanding any other
      provision in this Debenture or in any of the other Transaction Documents,
      payments of principal, interest and unusued line fees under the Company’s notes
      with Laurus (i.e., the Minimum Borrowing Note and the Revolving Note) and the
      repayment of “over advances” (as defined in the Laurus Security Agreement) other
      than during an event of default (as defined in the Laurus Security Agreement)
      shall not be deemed an Event of Default under this Debenture.

     

    
      	
               

            	
              Section
                5.

            	
              [Intentionally
                Omitted.]

            


    

     

     

     

     

    
      5

      
        

      

    

     

     

     

    
      	
               

            	
              Section
                6.

            	
              [Intentionally
                Omitted.] 

            


    

     

    
      	
               

            	
              Section
                7.

            	
              Covenants.

            


    

     

    a)            Negative
      Covenants. So long as any portion of
      this Debenture is outstanding, the Company will not and will not permit any
      of
      its Subsidiaries to directly or indirectly, without the prior written consent
      of
      a majority of the outstanding principal amount of all Debentures (which majority
      must include DunKnight Telecom Partners LLC, to the extent such entity is then
      a
      Holder):

     

    (i)    other
      than Permitted Indebtedness, enter into, create, incur, assume,
      guarantee or suffer to exist any indebtedness for borrowed money of any kind,
      including but not limited to, a guarantee, on or with respect to any of its
      property or assets now owned or hereafter acquired or any interest therein
      or
      any income or profits therefrom; provided that this subsection (i) shall not
      apply to any indebtedness incurred by the Company the proceeds of which are
      used
      to pay in full all principal, interest and other amounts then due and owing
      under the Debentures;

     

    (ii)    other
      than Permitted Liens, enter into, create, incur, assume or suffer
      to exist any liens of any kind, on or with respect to any of its property or
      assets now owned or hereafter acquired or any interest therein or any income
      or
      profits therefrom;

     

    (iii)    amend
      its certificate of incorporation, bylaws or other charter documents
      so as to materially and adversely affect the rights of any Holder
      hereunder;

     

    (iv)    repay,
      repurchase or offer to repay, repurchase or otherwise acquire more
      than a de minimis number of
      shares of its Common Stock or Common Stock Equivalents;

     

    (v)    pay
      cash dividends or distributions on any equity securities of the
      Company;

     

    (vi)    sell,
      assign or otherwise transfer any of its assets, other than sales of
      inventory in the ordinary course of business, the disposition of obsolete or
      unusable assets or the disposition of all or substantially all of the assets
      or
      capital stock of Vector Internet Services, Inc., a wholly owned operating
      subsidiary of the Company (“VISI”), by stock or asset sale or other such sale
      transaction;

     

    (vii)    increase
      the base salary of its chief executive officer to not more than
      $300,000 per annum;

     

     

     

    
      6

      
        

      

    

     

     

    (viii)    enter
      into any agreement, contract or understanding with any Person,
      whether for the receipt or provision of goods or services, requiring the
      expenditure by the Company of more than $150,000 in any one or a series of
      related transactions;

     

    (ix)    commence
      a case, as debtor, under any applicable bankruptcy or insolvency
      laws as now or hereafter in effect or any successor thereto, or commence any
      other proceeding under any reorganization, arrangement, adjustment of debt,
      relief of debtors, dissolution, insolvency or liquidation or similar law of
      any
      jurisdiction whether now or hereafter in effect relating to the Company or
      any
      Subsidiary thereof, or make a general assignment for the benefit of
      creditors;

     

    (x)    be
      a party to any Change of Control Transaction, agree to sell or dispose
      of all or in excess of 33% of its assets in one or more transactions (whether
      or
      not such sale would constitute a Change of Control Transaction) or redeem or
      repurchase more than a de minimis
      number of its outstanding shares of Common Stock or other equity securities
      of
      the Company (other than repurchases of shares of Common Stock or other equity
      securities of departing officers and directors of the Company); provided that
      subsection (x) shall not apply to the extent a transaction is permitted by
      subsection (vi) above;

     

    (xi)    make
      any change in the Company's business objectives, purposes,
      operations or capital structure or enter into any agreement providing third
      party management rights with respect to the Company’s business except for
      changes approved unanimously by the Board of Directors of the
      Company;

     

    (xii)    other
      than the Subordination Agreement, enter into or suffer the
      existence of any agreement restricting the ability of the Company to make any
      payments, directly or indirectly, hereunder; 

     

    (xiii)    permit
      any Person to declare a default under, or terminate prior to
      expiration of its scheduled term, any material lease, license, agreement,
      contract or other arrangement such Person has with the Company (other than
      customer service agreements which may be terminated by parties thereto in the
      ordinary course of business);

     

    (xiv)    undertake
      any Subsequent Financing other than Exempt Issuances (as
      defined in the Purchase Agreement) and as otherwise permitted therein;
      or

     

     

     

     

    
      7

      
        

      

    

     

     

    (xv)   enter
      into any agreement to effect what would otherwise be prohibited by the
      foregoing.

     

    b)            Financial
      Covenants. So long as any portion of
      this Debenture is outstanding, the Company shall, and shall cause each of its
      Subsidiaries to:

     

    (i)    
remain
      solvent at all times (“solvent” for purposes of this subsection
      (b)(i) shall mean that the Company shall be able to pay its debts generally
      as
      they come due); and

     

    (ii)    within
      45 days after the end of each month, provide the Holder with an
      internally prepared unaudited balance sheet and income statement for the period
      ending the immediately preceding month; and

     

    (iii)    maintain
      a balance of unrestricted, unencumbered marketable securities,
      cash and cash equivalents with a value of at least $1,500,000.

     

    
      	
               

            	
              Section
                8.

            	
              Events
                of Default.


            


    

     

    a)            “Event
      of Default,”
      wherever used herein, means any one of the following events (whatever the reason
      and whether it shall be voluntary or involuntary or effected by operation of
      law
      or pursuant to any judgment, decree or order of any court, or any order, rule
      or
      regulation of any administrative or governmental body):

     

    (i)    any
      default in the payment of (A) the principal amount of any Debenture,
      or (B) interest (including Late Fees) on, or liquidated damages in respect
      of,
      any Debenture, as and when the same shall become due and payable (whether on
      the
      Maturity Date or by acceleration or otherwise) which default, solely in the
      case
      of an interest payment or other default under clause (B) above, is not cured,
      within 3 Trading Days;

     

    (ii)    the
      Company shall fail to observe or perform any other covenant or
      agreement contained in this Debenture or any other Debenture which failure
      is
      not cured, if possible to cure, within the earlier to occur of (A) 5 Trading
      Days after notice of such default sent to the Company by the Holder or by any
      other Holder and (B) 10 Trading Days after the Company shall become aware of
      such failure;

     

    (iii)    a
      default or event of default (subject to any grace or cure period provided for
      in
      the applicable agreement, document or instrument) shall occur under (A) any
      of
      the Transaction Documents, or (B) any other material agreement, lease, document
      or instrument to which the Company or any Subsidiary is bound (provided the
      default or event of default is material);

     

     

     

     

    
      8

      
        

      

    

     

     

    (iv)    any
      representation or warranty made herein, or in any other Transaction
      Documents, or in any written statement pursuant hereto or thereto, shall be
      untrue or incorrect as of the date when made or deemed made, except to the
      extent that such untruth or incorrectness does not (1) have a Material Adverse
      Effect or (2) restrict or limit the Holder’s ability to exercise its rights and
      remedies under this Debenture, including, without limitation, in respect to
      the
      collateral security interest in the Company’s assets; 

     

    (v)    (i)
      the Company or any of its Subsidiaries shall commence a case, as
      debtor, under any applicable bankruptcy or insolvency laws as now or hereafter
      in effect or any successor thereto, or the Company or any Subsidiary commences
      any other proceeding under any reorganization, arrangement, adjustment of debt,
      relief of debtors, dissolution, insolvency or liquidation or similar law of
      any
      jurisdiction whether now or hereafter in effect relating to the Company or
      any
      Subsidiary thereof or (ii) there is commenced a case against the Company or
      any
      Subsidiary thereof, under any applicable bankruptcy or insolvency laws, as
      now
      or hereafter in effect or any successor thereto which remains undismissed for
      a
      period of 90 days; or (iii) the Company or any Subsidiary thereof is adjudicated
      by a court of competent jurisdiction insolvent or bankrupt; or any order of
      relief or other order approving any such case or proceeding is entered; or
      (iv)
      the Company or any Subsidiary thereof suffers any appointment of any custodian
      or the like for it or any substantial part of its property which continues
      undischarged or unstayed for a period of 90 days; or (v) the Company or any
      Subsidiary thereof makes a general assignment for the benefit of creditors;
      or
      (vi) the Company shall fail to pay its debts generally as they become due;
      or
      (vii) the Company shall state that it is unable to pay, or shall be unable
      to
      pay, its debts generally as they become due or (viii) the Company or any
      Subsidiary thereof shall by any act or failure to act expressly indicate its
      consent to, approval of or acquiescence in any of the foregoing (other than
      the
      events described in subsection (vi) above); or (ix) any corporate or other
      action is taken by the Company or any Subsidiary thereof for the purpose of
      effecting any of the foregoing (other than the events described in subsection
      (vi) above);

     

    (vi)    the
      Company or any Subsidiary shall default in any of its obligations
      under any mortgage, credit agreement or other facility, indenture agreement,
      factoring agreement or other instrument under which there may be issued, or
      by
      which there may be secured or evidenced, any indebtedness for borrowed money
      or
      money due under any long term leasing or factoring arrangement of the Company
      in
      an amount exceeding $100,000, whether such indebtedness now exists or shall
      hereafter be created and such default shall result in such indebtedness becoming
      or being declared due and payable prior to the date on which it would otherwise
      become due and payable; 

     

     

     

     

    
      9

      
        

      

    

     

     

    (vii)    the
      Common Stock shall not be eligible for quotation on or quoted for
      trading on a Trading Market and shall not again be eligible for and quoted
      or
      listed for trading thereon within five Trading Days; and

     

    (viii)    other
      than the transactions contemplated by the Transaction Documents and
      the disposition of all or substantially all of the assets or capital stock
      of
      VISI, the Company shall be a party to any Change of Control Transaction, shall
      agree to sell or dispose of all or in excess of 33% of its assets in one or
      more
      transactions (whether or not such sale would constitute a Change of Control
      Transaction) or shall redeem or repurchase more than a de
      minimis number of its outstanding shares of Common Stock
      or other equity securities of the Company (other than repurchases of shares
      of
      Common Stock or other equity securities of departing officers and directors
      of
      the Company; provided such repurchases shall not exceed $50,000, in the
      aggregate, for all officers and directors during the term of this
      Debenture).

              

    b)            Remedies
      Upon Event of Default. If any Event of
      Default occurs, the full principal amount of this Debenture, together with
      interest and other amounts owing in respect thereof, to the date of acceleration
      shall become, at the Holder’s election, immediately due and payable in cash. The
      aggregate amount payable upon an Event of Default shall be equal to the
      Mandatory Default Amount. Commencing 5 days after the occurrence of any Event
      of
      Default that results in the eventual acceleration of this Debenture, the
      interest rate on this Debenture, in addition to the interest rate payable
      hereunder, shall accrue at the rate of 10.50% per annum, or such lower maximum
      amount of interest permitted to be charged under applicable law. Upon the
      payment in full of the Mandatory Default Amount on this entire Debenture the
      Holder shall promptly surrender this Debenture to or as directed by the Company.
      The Holder need not provide and the Company hereby waives any presentment,
      demand, protest or other notice of any kind, and the Holder may immediately
      and
      upon expiration of any grace period enforce any and all of its rights and
      remedies hereunder and all other remedies available to it under applicable
      law.
      Such declaration may be rescinded and annulled by Holder at any time prior
      to
      payment hereunder and the Holder shall have all rights as a Debenture holder
      until such time, if any, as the full payment under this Section shall have
      been
      received by it. No such rescission or annulment shall affect any subsequent
      Event of Default or impair any right consequent thereon. 

     

    Section
      9.          Security Interest.
      This Debenture is ratably
      secured by the Agency, Guaranty and Security Agreement dated as of November
      2,
      2005 among the Company, the other grantors party thereto and the Agent (together
      with all amendments and supplements thereto, the “Security Agreement”) and by the related
      financing
      statements and certain other instruments as provided in the Security Agreement.
      Reference is hereby made to the Security Agreement for a description of the
      collateral thereby pledged and assigned, the nature and extent of the security
      for this Debenture, and the rights of the Holder in respect of such security
      and
      otherwise.

     

     

     

     

    
      10

      
        

      

    

     

     

    Section
      10.       General
      Continuing Guaranty. The due and punctual payment of the
      principal of, and interest on, the amounts owed by the Issuer under this
      Debenture and the other Debentures, and the due and punctual payment of all
      other obligations owed by the Company, or any other Subsidiary of the Company
      pursuant to the Transaction Documents, are jointly and severally guarantied
      by
      certain of the Subsidiaries pursuant to the Security Agreement. Reference is
      hereby made to the Security Agreement for a description of the obligations
      guarantied thereunder and the rights of the Holders and the Agent in respect
      thereof. 

                    Section
      11.       Miscellaneous.

    a)            Notices.
      Any and all notices or other
      communications or deliveries to be provided by the Holder hereunder shall be
      in
      writing and delivered personally, by facsimile, sent by a nationally recognized
      overnight courier service, addressed to the Company, at the address set forth
      above, facsimile number (203) 624-4231, Attn: General Counselor such other address or facsimile number as the Company
      may specify for
      such purposes by notice to the Holder delivered in accordance with this Section.
      Any and all notices or other communications or deliveries to be provided by
      the
      Company hereunder shall be in writing and delivered personally, by facsimile,
      sent by a nationally recognized overnight courier service addressed to each
      Holder at the facsimile telephone number or address of such Holder appearing
      on
      the books of the Company, or if no such facsimile telephone number or address
      appears, at the principal place of business of the Holder. Any notice or other
      communication or deliveries hereunder shall be deemed given and effective on
      the
      earliest of (i) the date of transmission, if such notice or communication is
      delivered via facsimile at the facsimile telephone number specified in this
      Section prior to 5:30 p.m. (New York City time), subject to electronic
      confirmation, (ii) the date after the date of transmission, if such notice
      or
      communication is delivered via facsimile at the facsimile telephone number
      specified in this Section later than 5:30 p.m. (New York City time) on any
      date
      and earlier than 11:59 p.m. (New York City time) on such date, subject to
      electronic confirmation, (iii) the second Business Day following the date of
      mailing, if sent by nationally recognized overnight courier service, or (iv)
      upon actual receipt by the party to whom such notice is required to be
      given.

     

    b)            Absolute
      Obligation. Except as expressly provided
      herein, no provision of this Debenture shall alter or impair the obligation
      of
      the Company, which is absolute and unconditional, to pay the principal of,
      interest and liquidated damages (if any) on, this Debenture at the time, place,
      and rate, and in the coin or currency, herein prescribed. This Debenture is
      a
      direct debt obligation of the Company. This Debenture ranks paripassu
      with all
      other Debentures now or hereafter issued under the terms set forth
      herein.

     

    c)            Lost
      or Mutilated Debenture. If this Debenture
      shall be mutilated, lost, stolen or destroyed, the Company shall execute and
      deliver, in exchange and substitution for and upon cancellation of a mutilated
      Debenture, or in lieu of or in substitution for a lost, stolen or destroyed
      Debenture, a new Debenture for the principal amount of this Debenture so
      mutilated, lost, stolen or destroyed but only upon receipt of evidence of such
      loss, theft or destruction of such Debenture, and of the ownership hereof,
      and
      indemnity, if requested, all reasonably satisfactory to the Company.

     

     

    
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    d)            Governing
      Law. All questions concerning the
      construction, validity, enforcement and interpretation of this Debenture shall
      be governed by and construed and enforced in accordance with the internal laws
      of the State of New York, without regard to the principles of conflicts of
      law
      thereof. Each party agrees that all legal proceedings concerning the
      interpretations, enforcement and defense of the transactions contemplated by
      this Debenture (whether brought against a party hereto or its respective
      affiliates, directors, officers, shareholders, employees or agents) shall be
      commenced in the state and federal courts sitting in the City of New York,
      Borough of Manhattan (the “New York
      Courts”). Each party hereto hereby irrevocably submits
      to the exclusive jurisdiction of the New York Courts for the adjudication of
      any
      dispute hereunder or in connection herewith or with any transaction contemplated
      hereby or discussed herein, and hereby irrevocably waives, and agrees not to
      assert in any suit, action or proceeding, any claim that it is not personally
      subject to the jurisdiction of any such court, or such New York Courts are
      improper or inconvenient venue for such proceeding. Each party hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or proceeding by mailing a copy thereof via
      registered or certified mail or overnight delivery (with evidence of delivery)
      to such party at the address in effect for notices to it under this Debenture
      and agrees that such service shall constitute good and sufficient service of
      process and notice thereof. Nothing contained herein shall be deemed to limit
      in
      any way any right to serve process in any manner permitted by law. Each party
      hereto hereby irrevocably waives, to the fullest extent permitted by applicable
      law, any and all right to trial by jury in any legal proceeding arising out
      of
      or relating to this Debenture or the transactions contemplated hereby. If either
      party shall commence an action or proceeding to enforce any provisions of this
      Debenture, then the prevailing party in such action or proceeding shall be
      reimbursed by the other party for its attorneys fees and other costs and
      expenses incurred with the investigation, preparation and prosecution of such
      action or proceeding.

     

    e)            Waiver.
      Any waiver by the Company or the Holder
      of a breach of any provision of this Debenture shall not operate as or be
      construed to be a waiver of any other breach of such provision or of any breach
      of any other provision of this Debenture. The failure of the Company or the
      Holder to insist upon strict adherence to any term of this Debenture on one
      or
      more occasions shall not be considered a waiver or deprive that party of the
      right thereafter to insist upon strict adherence to that term or any other
      term
      of this Debenture. Any waiver must be in writing.

     

    f)             Severability.
      If any provision of this Debenture
      is invalid, illegal or unenforceable, the balance of this Debenture shall remain
      in effect, and if any provision is inapplicable to any person or circumstance,
      it shall nevertheless remain applicable to all other persons and circumstances.
      If it shall be found that any interest or other amount deemed interest due
      hereunder violates applicable laws governing usury, the applicable rate of
      interest due hereunder shall automatically be lowered to equal the maximum
      permitted rate of interest. 

     

     

     

    
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    g)            Next
      Business Day. Whenever any payment or other
      obligation hereunder shall be due on a day other than a Business Day, such
      payment shall be made on the next succeeding Business Day.

     

    h)            Headings.
      The headings contained herein are for
      convenience only, do not constitute a part of this Debenture and shall not
      be
      deemed to limit or affect any of the provisions hereof.

     

    i)             Assumption. 
      Any successor to the Company or
      surviving entity in a Change of Control Transaction shall (i) assume in writing
      all of the obligations of the Company under this Debenture and the other
      Transaction Documents pursuant to written agreements in form and substance
      satisfactory to the Holder (such approval not to be unreasonably withheld or
      delayed) prior to such Change of Control Transaction and (ii) to issue to the
      Holder a new debenture of such successor entity evidenced by a written
      instrument substantially similar in form and substance to this Debenture,
      including, without limitation, having a principal amount and interest rate
      equal
      to the principal amounts and the interest rates of the Debentures held by the
      Holder and having similar ranking to this Debenture, and satisfactory to the
      Holder (any such approval not to be unreasonably withheld or delayed).  The
      provisions of this Section 9(i) shall apply similarly and equally to successive
      Change of Control Transactions and shall be applied without regard to any
      limitations of this Debenture.

     

    j)             Applicable
      Interest Rates. To the extent it may
      lawfully do so, the Company hereby agrees not to insist upon or plead or in
      any
      manner whatsoever claim, and will resist any and all efforts to be compelled
      to
      take the benefit or advantage of, usury laws wherever enacted, now or at any
      time hereafter in force, in connection with any claim, action or proceeding
      that
      may be brought by any Holder in order to enforce any right or remedy under
      any
      Transaction Document, including this Debenture. Notwithstanding any provision
      to
      the contrary contained in any Transaction Document, it is expressly agreed
      and
      provided that the total liability of the Company under the Transaction Documents
      for payments in the nature of interest shall not exceed the maximum lawful
      rate
      authorized under applicable law (the “Maximum
      Rate”), and, without limiting the foregoing, in no event
      shall any rate of interest or default interest, or both of them, when aggregated
      with any other sums in the nature of interest that the Company may be obligated
      to pay under the Transaction Documents exceed such Maximum Rate. It is agreed
      that if the maximum contract rate of interest allowed by law and applicable
      to
      the Debenture is increased or decreased by statute or any official governmental
      action subsequent to the date hereof, the new maximum contract rate of interest
      allowed by law will be the Maximum Rate applicable to the Transaction Documents
      from the effective date forward, unless such application is precluded by
      applicable law. If under any circumstances whatsoever, interest in excess of
      the
      Maximum Rate is paid by the Company to any Holder with respect to indebtedness
      evidenced by the Transaction Documents, such excess shall be applied by such
      Holder to the unpaid principal balance of any such indebtedness or be refunded
      to the Company, the manner of handling such excess to be at such Holder’s
      election.

     

     

    *********************

     

    
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IN
    WITNESS WHEREOF, the Company has caused this Debenture to be duly
    executed by a duly authorized officer as of the date first above
    indicated.
    
    

    	 	 	 
	 	
            DSL.NET,
              INC.

          
	 
 	 
 	 
 
	 	By:  	/s/ Kirby
            G. Pickle
	 	
            

            Name: Kirby G. Pickle
	 	Title:
            President & Chief Executive
            Officer 


     

     

     

     

     

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