Document:

WWW.EXFILE.COM, INC. -- 14531 -- DSL.NET, INC. -- EXHIBIT 10.3 TO FORM 10-Q

    EXHIBIT
      10.03

     

     

    THIS
      NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
      LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
      MAY
      NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
      APPLICABLE STATES SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO DSL.NET, INC. THAT SUCH REGISTRATION IS NOT
      REQUIRED.

     

     

    AMENDED
      AND RESTATED SECURED REVOLVING NOTE

     

    FOR
      VALUE
      RECEIVED, DSL.NET, INC., a Delaware corporation (the “Borrower”),
      promises to pay to LAURUS MASTER FUND, LTD., c/o Ironshore Corporate Services
      Ltd., P.O. Box 1234 G.T., Queensgate House, South Church Street, Grand Cayman,
      Cayman Islands, Fax: 345-949-9877 (the “Holder”)
      or its
      registered assigns, on order, the sum of Seven Hundred Fifty Thousand Dollars
      ($750,000) without duplication of any amounts owing by Borrower to Holder under
      the Minimum Borrowing Notes (as defined in the Security Agreement referred
      to
      below), or, if different, the aggregate outstanding principal amount of all
      “Loans” made and allocated hereto (as such term is defined in the Security
      Agreement referred to below), together with any accrued and unpaid interest
      hereon, on November 1, 2006 (the “Maturity
      Date”).

     

    Capitalized
      terms used herein without definition shall have the meanings ascribed to such
      terms in the Security Agreement between the Borrower and the Holder dated as
      of
      August 31, 2004 (as amended, modified and supplemented from time to time, the
      “Security
      Agreement”).

     

    The
      following terms shall apply to this Amended and Restated Secured Revolving
      Note
      (this “Note”):

     

    ARTICLE
      I

    CONTRACT
      RATE & PREPAYMENTS

     

    1.1.  Interest
      Rate.
      Subject
      to Sections 4.3 and 5.7 hereof, interest payable on this Note shall accrue
      at a
      rate per annum equal to (a) seven percent (7%) through August 1, 2006 and (b)
      ten percent (10.00%) after August 1, 2006 (the “Contract
      Rate”).
      

     

    1.2.  Contract
      Rate and Payments.
      Interest shall be (i) calculated on the basis of a 360 day year, and (ii)
      payable monthly, in arrears, commencing on October 1, 2004 and on the first
      business day of each consecutive calendar month thereafter until the Maturity
      Date (and on the Maturity Date), whether by acceleration or otherwise (each,
      a
“Contract
      Rate Payment Date”).
       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
      II

    HOLDER’S
      CONVERSION RIGHTS

     

    2.1.  Optional
      Conversion.
      Subject
      to the terms of this Article II, the Holder shall have the right, but not the
      obligation, at any time until the Maturity Date, or during an Event of Default
      (as defined in Article IV), and, subject to the limitations set forth in Section
      2.2 hereof, to convert all or any portion of the outstanding Principal Amount
      and/or accrued interest and fees due and payable into fully paid and
      nonassessable restricted shares of the Common Stock at the Fixed Conversion
      Price (defined below). For purposes hereof, subject to Section 2.7 hereof,
      the
      initial “Fixed
      Conversion Price”
means
      $0.28 (105% of the average of the closing price of the Common Stock for the
      ten
      (10) trading days immediately prior to the date hereof.) The shares of Common
      Stock to be issued upon such conversion are herein referred to as the
“Conversion
      Shares.”

     

    2.2.  Conversion
      Limitation.
      .4.99%
      Limitation.
      Notwithstanding anything contained herein to the contrary, the Holder shall
      not
      be entitled to convert pursuant to the terms of this Note an amount that would
      be convertible into that number of shares of Common Stock which, when added
      to
      the number of shares of Common Stock otherwise beneficially owned by such Holder
      (with respect to such Holder, such number of shares of Common Stock herein
      referred to as the Holder’s “Beneficial
      Ownership”)
      including those issuable upon exercise of warrants held by such Holder would
      exceed 4.99% of the outstanding shares of Common Stock of the Borrower at the
      time of conversion. For the purposes of the immediately preceding sentence,
      beneficial ownership shall be determined in accordance with Section 13(d) of
      the
      Exchange Act and Regulation 13d-3 thereunder. In connection with any obligation
      of the Borrower to issue to the holder shares of Common Stock pursuant to the
      terms hereof, the Holder will inform the Borrower of such Holder’s Beneficial
      Ownership. Subject to Section 2.3 below, the conversion limitation described
      in
      this Section 2.2 shall automatically become null and void without any notice
      to
      Borrower upon the occurrence and during the continuance beyond any applicable
      grace period of an Event of Default, or upon 75 days prior notice to the
      Borrower. 

     

    2.3.  19.99%
      Limitation.
      Notwithstanding anything contained herein to the contrary, the number of shares
      of Common Stock issuable by the Borrower and acquirable by the Holder at a
      price
      below $0.24 per share pursuant to the terms of this Note, the Security Agreement
      or any Ancillary Agreement, shall not exceed an aggregate of 19.99% of the
      total
      issued and outstanding shares (calculated in accordance with applicable
      Principal Market rules and regulations) shares of the Borrower’s Common Stock
      (subject to appropriate adjustment for stock splits, stock dividends, or other
      similar recapitalizations affecting the Common Stock) or otherwise violate
      the
      Borrower’s obligations under the rules and regulations of the Principal Market
      (the “Maximum
      Common Stock Issuance”),
      unless Stockholder Approval shall first be obtained in accordance with Section
      13(u) of the Security Agreement. Borrower shall not be obligated to issue such
      shares of Common Stock in excess of the Maximum Common Stock 

     

    
      
         

      

      
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    Issuance
      unless and until the Borrower obtains the Stockholder Approval at its next
      annual meeting of stockholders in accordance with applicable Principal Market
      rules and regulations.

     

    2.4       Optional
      Prepayment in Cash.
      (a)
      Subject to Section 2.4(b) hereof, the Borrower will have the option of prepaying
      this Note in full (“Optional
      Prepayment”)
      by
      paying to the Holder a sum of money equal to one hundred percent (100%) of
      the
      then outstanding principal amount of this Note together with accrued but unpaid
      interest thereon and any and all other sums due, accrued or payable to the
      Holder arising under this Note, (the “Prepayment
      Amount”).
      The
      Borrower may exercise its prepayment right by delivery of written notice (the
      “Notice of Prepayment”) to the Holder and otherwise complying with the
      provisions of this Section 2.4.

    

    (b)
      Any
      Notice of Prepayment delivered pursuant to this Section 2.4 shall specify the
      date for such Optional Prepayment (the “Prepayment
      Payment Date”)
      which
      date shall be seven (7) days after the date of the Notice of Prepayment (the
      “Prepayment
      Period”).
      A
      Notice of Prepayment shall not be effective with respect to any portion of
      this
      Note for which the Holder has previously delivered a Notice of Conversion
      (defined below) pursuant to Section 2.1, or for conversions made by the Holder
      pursuant to Section 2.1 during the Prepayment Period of all or any portion
      of
      the then outstanding debt under this Note. Subject to Conversion by Holder
      as
      herein provided, on the Prepayment Payment Date, the Prepayment Amount shall
      be
      determined as of such Holder’s conversion elections had been completed
      immediately prior to the date of the notice of Prepayment. On the Prepayment
      Payment Date, the Prepayment Amount (plus any additional interest and fees
      accruing on this Note during the Prepayment Period) must be irrevocably paid
      in
      full in immediately available funds to the Holder. In the event the Borrower
      fails to pay the Prepayment Amount on the Prepayment Payment Date, then such
      Prepayment Notice will be null and void. If Holder effects a conversion of
      all
      of the outstanding indebtedness of this Note during the Prepayment Period,
      this
      Note shall be deemed fully paid and terminated upon such conversion without
      any
      further obligation of Borrower hereunder.

     

    2.4.     
      Mechanics of Holder’s Conversion. In the event that the Holder elects to
      convert this Note into Common Stock, the Holder shall give notice of such
      election by delivering an executed and completed notice of conversion
      (“Notice of Conversion”) to the Borrower and such Notice of
      Conversion shall provide a breakdown in reasonable detail of the Principal
      Amount, accrued interest and fees that are being converted. On each Conversion
      Date (as hereinafter defined) and in accordance with its Notice of Conversion,
      the Holder shall make the appropriate reduction to the Principal Amount, accrued
      interest and fees as entered in its records and shall provide written notice
      thereof to the Borrower within two (2) business days after the Conversion Date.
      Each date on which a Notice of Conversion is delivered or telecopied to the
      Borrower in accordance with the provisions hereof shall be deemed a Conversion
      Date (the “Conversion Date”). A form of Notice of Conversion to
      be employed by the Holder is annexed hereto as Exhibit A. Pursuant to the terms
      of the Notice of Conversion, the Borrower will issue instructions to the
      transfer agent accompanied by an opinion of counsel within one (1) business
      day
      of the date of the delivery to Borrower of the Notice of Conversion and shall
      cause the transfer agent to transmit the certificates representing the
      Conversion Shares to the Holder by crediting the account of the Holder’s
      designated broker with the Depository Trust Corporation 

     

    
      
         

      

      
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    (“DTC”)
      through its Deposit Withdrawal Agent Commission (“DWAC”)
      system
      within three (3) business days after receipt by the Borrower of the Notice
      of
      Conversion (the “Delivery
      Date”).
      In
      the case of the exercise of the conversion rights set forth herein the
      conversion privilege shall be deemed to have been exercised and the Conversion
      Shares issuable upon such conversion shall be deemed to have been issued upon
      the date of receipt by the Borrower of the Notice of Conversion. The Holder
      shall be treated for all purposes as the record holder of such Common Stock,
      unless the Holder provides the Borrower written instructions to the contrary.
      

     

    2.5.  Late
      Payments.
      The
      Borrower understands that a delay in the delivery of the shares of Common Stock
      in the form required pursuant to this Article II beyond the Delivery Date could
      result in economic loss to the Holder. As compensation to the Holder for such
      loss, the Borrower agrees to pay late payments to the Holder for late issuance
      of such shares in the form required pursuant to this Article II upon conversion
      of this Note, in the amount equal to $500 per business day after the Delivery
      Date. The Borrower shall pay any payments incurred under this Section in
      immediately available funds upon demand. 

     

    2.6.  Adjustment
      Provisions.
      The
      Fixed Conversion Price and number and kind of shares or other securities to
      be
      issued upon conversion determined pursuant to Section 2.1 shall be subject
      to
      adjustment from time to time upon the happening of certain events while this
      conversion right remains outstanding, as follows:

     

    A.    
      Reclassification.
      If the
      Borrower at any time shall, by reclassification or otherwise, change the Common
      Stock into the same or a different number of securities of any class or classes,
      this Note, as to the unpaid Principal Amount and accrued interest thereon,
      shall
      thereafter be deemed to evidence the right to purchase an adjusted number of
      such securities and kind of securities as would have been issuable as the result
      of such change with respect to the Common Stock (i) immediately prior to or
      (ii)
      immediately after, such reclassification or other change at the sole election
      of
      the Holder.

     

    B.  Stock
      Splits, Combinations and Dividends.
      If the
      shares of Common Stock are subdivided or combined into a greater or smaller
      number of shares of Common Stock, or if a dividend is paid on the Common Stock
      or any preferred stock issued by the Borrower in shares of Common Stock, the
      Fixed Conversion Price shall be proportionately reduced in case of subdivision
      of shares or stock dividend or proportionately increased in the case of
      combination of shares, in each such case by the ratio which the total number
      of
      shares of Common Stock outstanding immediately after such event bears to the
      total number of shares of Common Stock outstanding immediately prior to such
      event.

     

    C.      Share
      Issuances.
      Subject
      to the provisions of this Section 2.6, if the Borrower shall at any time prior
      to the conversion or repayment in full of the Principal Amount issue any shares
      of Common Stock or securities convertible into Common Stock to a person other
      than the Holder (except
      pursuant to: (i) Subsections A or B above; (ii) securities issued, or deemed
      issued (as provided below), to directors, officers, employees or consultants
      of
      the Borrower or a subsidiary of the Borrower in connection with their service
      as
      directors of the Borrower or a subsidiary of the Borrower, their employment
      by
      the Borrower or a subsidiary of the Borrower or their retention as consultants
      by the Borrower or a subsidiary of the Borrower under any stock agreement and/or
      stock plan adopted by the Borrower, plus such number of 

     

    
      
         

      

      
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    shares
      of
      Common Stock which are repurchased by the Borrower from such persons pursuant
      to
      contractual rights held by the Borrower and at repurchase prices not exceeding
      the respective original purchase prices paid by such persons to the Borrower
      therefor; (iii) shares of Common Stock issuable upon exercise of options,
      warrants or other obligations outstanding as of the date hereof; (iv)
shares
      of
      Common Stock issuable upon the conversion of the Borrower’s Preferred Stock in
      existence on the date hereof; and (v) shares of Common Stock issued as payment
      of interest in accordance with the terms of the notes issued pursuant to that
      Note and Warrant Purchase Agreement dated as of July 18, 2003 by and among
      the
      Borrower and the investors named therein) for a consideration per share (the
      “Offer
      Price”)
      less
      than the Fixed Conversion Price in effect at the time of such issuance, then
      the
      Fixed Conversion Price shall be immediately reset pursuant to the formula
      below:

     

    If
      the
      Corporation issues any additional shares pursuant to Section 2.6C above then,
      and thereafter successively upon each such issue, the Fixed Conversion Price
      shall be adjusted by multiplying the then applicable Fixed Conversion Price
      by
      the following fraction: 

     

    

    
      	
               

              A
                +
                B

            
	
               

              (A
                + B) + [((C - D) x B) / C]

            

    

     

    A
      = Total
      amount of shares convertible pursuant to this Note.

     

    B
      =
      Actual shares sold in the offering

     

    C
      = Fixed
      Conversion Price

     

    D
      =
      Offering price

     

    For
      purposes hereof, the issuance of any security of the Borrower convertible into
      or exercisable or exchangeable for Common Stock shall result in an adjustment
      to
      the Fixed Conversion Price at the time of issuance of such securities.
      Notwithstanding the immediately foregoing, no adjustment to the then applicable
      Fixed Conversion Price shall be made if such adjustment, as calculated pursuant
      to this Section 2.6(C), would result in a change to the then applicable Fixed
      Conversion Price of less than $0.01.

     

    D.     
      Computation
      of Consideration.
      For
      purposes of any computation respecting consideration received pursuant to
      Subsection C above, the following shall apply:

     

    (a)  in
      the
      case of the issuance of shares of Common Stock for cash, the consideration
      shall
      be the amount of such cash, provided that in no case shall any deduction be
      made
      for any commissions, discounts or other expenses incurred by the Borrower for
      any underwriting of the issue or otherwise in connection therewith;

     

    
      
         

      

      
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    (b)  in
      the
      case of the issuance of shares of Common Stock for a consideration in whole
      or
      in part other than cash, the consideration other than cash shall be deemed
      to be
      the fair market value thereof as determined in good faith by the Board of
      Directors of the Borrower (irrespective of the accounting treatment thereof);
      and 

     

    (c)  Upon
      any
      such exercise, the aggregate consideration received for such securities shall
      be
      deemed to be the consideration received by the Borrower for the issuance of
      such
      securities plus the additional minimum consideration, if any, to be received
      by
      the Borrower upon the conversion or exchange thereof (the consideration in
      each
      case to be determined in the same manner as provided in clauses (a) and (b)
      of
      this Subsection (D)).

     

    2.7.  Reservation
      of Shares.
      During
      the period the conversion right exists, the Borrower will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to provide
      for the issuance of Common Stock upon the full conversion of this Note. The
      Borrower represents that upon issuance, such shares will be duly and validly
      issued, fully paid and non-assessable. The Borrower agrees that its issuance
      of
      this Note shall constitute full authority to its officers, agents, and transfer
      agents who are charged with the duty of executing and issuing stock certificates
      to execute and issue the necessary certificates for shares of Common Stock
      upon
      the conversion of this Note.

     

    ARTICLE
      III

    EVENTS
      OF DEFAULT

     

    The
      occurrence of any of the events set forth in Sections 3.1 and 3.2, shall be
      an
      Event of Default (“Event
      of Default”):

     

    3.1.  Failure
      to Pay Principal, Interest or other Fees.
      Subject
      to Section 3.3, the Borrower fails to pay when due any installment of principal,
      interest or other fees hereon or on any other Note issued pursuant to the
      Security Agreement, or the Borrower fails to pay when due any amount due under
      any other promissory note issued by the Borrower, when due in accordance with
      the terms thereof where such failure to pay has had, or could reasonably be
      expected to have a Material Adverse Effect. 

     

    3.2      
      Other
      Events of Default.
      The
      occurrence of any other Event of Default set forth in Section 19 of the Security
      Agreement. 

     

    3.3      
      Payment
      Grace Period.
      The
      Borrower shall have a five (5) business day grace period to pay any monetary
      amounts due under this Note or the Security Agreement or any Ancillary
      Agreement.

     

    3.4      
      Conversion
      Privileges.
      The
      conversion privileges set forth in Article II shall remain in full force and
      effect immediately from the date hereof and until this Note is paid in
      full.

     

    3.5      
      Cumulative
      Remedies.
      The
      remedies under this Note shall be cumulative.

     

    
      
         

      

      
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    ARTICLE
      IV

    DEFAULT
      PAYMENTS

     

    4.1.  Default
      Payment.
      If an
      Event of Default occurs and is continuing beyond any applicable grace period,
      the Holder, at its option, may elect, in addition to all rights and remedies
      of
      Holder under the Security Agreement and all obligations of Borrower under the
      Security Agreement, to require the Borrower to make a Default Payment
      (“Default
      Payment”).
      The
      Default Payment shall be 112% of the outstanding principal amount of the Note,
      plus accrued but unpaid interest, all other fees then remaining unpaid, and
      all
      other amounts payable hereunder. The Default Payment shall be applied first
      to
      any fees due and payable to Holder pursuant to the Notes or the Ancillary
      Agreements, then to accrued and unpaid interest due on the Notes and then to
      outstanding principal balance of the Notes.

     

    4.2.  Default
      Payment Date and Default Notice Period.
      The
      Default Payment shall be due and payable on the fifth business day after an
      Event of Default as defined in Article III (“Default
      Payment Date”)
      has
      occurred and is continuing beyond any applicable grace period. The period
      between date upon which of an Event of Default has occurred and is continuing
      beyond any applicable grace period and the Default Payment Date shall be the
      “Default
      Period.”
If
      during the Default Period, the Borrower cures the Event of Default, the Event
      of
      Default will no longer exist and any additional rights the Holder had triggered
      by the occurrence and continuance of an Event of Default will no longer exist,
      including, without limitation, the right to receive the Default Payment. If
      the
      Event of Default is not cured during the Default Notice Period, all amounts
      payable hereunder shall be due and payable on the Default Payment Date, all
      without further demand, presentment or notice, or grace period, all of which
      hereby are expressly waived. 

     

    4.3.  
      Default Interest Rate.
      Following the occurrence and during the continuance of an Event of Default,
      interest on this Note shall automatically be increased to the Default Rate,
      and
      all outstanding Obligations under this Note, including unpaid interest, shall
      continue to accrue interest from the date of such Event of Default at such
      interest rate applicable to such Obligations until such Event of Default is
      cured or waived.

     

     

    ARTICLE
      V

    MISCELLANEOUS

     

    5.1.  Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

    5.2.  Notices.
      Any
      notice herein required or permitted to be given shall be in writing and provided
      in accordance with the terms of the Security Agreement.

     

    5.3.  
      Amendment Provision.
      The
      term “Note” and all reference thereto, as used throughout this instrument, shall
      mean this instrument as originally executed, or if later

     

    
      
         

      

      
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    amended
      or supplemented, then as so amended or supplemented, and any successor
      instrument as it may be amended or supplemented.

     

    5.4.  Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and assigns, and
      may
      be assigned by the Holder in accordance with the requirements of the Security
      Agreement.

     

    5.5.  Cost
      of Collection.
      If
      default is made in the payment of this Note, the Borrower shall pay the Holder
      hereof reasonable costs of collection, including reasonable attorneys’
fees.

     

    5.6.  Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of New York, without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      New
      York or in the federal courts located in the state of New York. Both parties
      and
      the individual signing this Note on behalf of the Borrower agree to submit
      to
      the jurisdiction of such courts. The prevailing party shall be entitled to
      recover from the other party its reasonable attorney’s fees and costs. In the
      event that any provision of this Note is invalid or unenforceable under any
      applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any such provision which
      may prove invalid or unenforceable under any law shall not affect the validity
      or unenforceability of any other provision of this Note. Nothing contained
      herein shall be deemed or operate to preclude the Holder from bringing suit
      or
      taking other legal action against the Borrower in any other jurisdiction to
      collect on the Borrower’s obligations to Holder, to realize on any collateral or
      any other security for such obligations, or to enforce a judgment or other
      court
      order in favor of Holder.

     

    5.7.  Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum permitted by such law, any payments in excess
      of
      such maximum shall be credited against amounts owed by the Borrower to the
      Holder and thus refunded to the Borrower.

     

    5.8.  Security
      Interest and Guarantee.
      The
      Holder has been granted a security interest in certain assets of the Borrower
      as
      more fully described in the Security Agreement.

     

    5.9.  Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against the
      other.

     

     

    [Balance
      of page intentionally left blank; signature page follows.]

    
      
         

      

      
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    IN
      WITNESS WHEREOF,
      the
      Borrower has caused this Secured Convertible Revolving Note to be signed in
      its
      name effective as of this 2nd day of June, 2006.

     

     

     

    DSL.NET,
      INC.

     

     

     

    By:
      /s/
      Walter
      Keisch                                      
  

    Name:
      Walter Keisch

    Title:
      CFO

     

     

     

    WITNESS:

     

     

    /s/
      Jodi P.
      Dottori                               
   

    Jodi
      P.
      Dottori

    
 

     

     

     

     

    
 

    
      
         

      

      
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    NOTICE
      OF CONVERSION

     

     

    (To
      be
      executed by the Holder in order to convert the Note)

     

     

    The
      undersigned hereby elects to convert $_________ of the principal and $_________
      of the interest due on the Secured Convertible Revolving Note issued by DSL.Net,
      Inc. on August 31, 2004, as amended, into Shares of Common Stock of DSL.net,
      Inc. (the “Borrower”) according to the conditions set forth in such Note, as of
      the date written below.

     

    
      	
               

              Date
                of Conversion:

            	 
	
               

              Conversion
                Price:

            	 
	
               

              Shares
                To Be Delivered:

            	 
	
               

              Signature:

            	 
	
               

              Print
                Name:

            	 
	
               

              Address:

            	 
	
               

               

            	 
	
               

              Holder
                DWAC instructions

            	
               

               

            
	 	 

    

     

    
 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        10WWW.EXFILE.COM, INC. -- 14531 -- DSL.NET, INC. -- EXHIBIT 10.4 TO FORM 10-Q

    EXHIBIT
      10.04

    

    AMENDMENT
      AGREEMENT

    

     

    This
      AMENDMENT AGREEMENT, dated as of June 2, 2006 (this “Agreement”), is entered
      into by and among DSL.NET, INC., a Delaware corporation (the “Company”),
      DUNKNIGHT TELECOM PARTNERS LLC, a Delaware limited liability company (“DK”),
      KNIGHT VISION FOUNDATION (“KVF;” together with DK, the “Investors”), and
      DUNKNIGHT TELECOM PARTNERS LLC, as administrative agent (the “Agent”), under
      that certain Agency, Guaranty and Security Agreement dated as of November 2,
      2005 (as amended, modified and/or supplemented from time to time, collectively,
      the “Security Agreement”). Capitalized terms used herein without definition
      shall have the meanings ascribed to such terms in that certain Securities
      Purchase Agreement dated as of November 2, 2005 (as amended, modified and/or
      supplemented from time to time, the “Purchase Agreement;” together with the
      Transaction Documents referred to therein, as amended, collectively, the “2005
      Loan Documents”). 

     

    WHEREAS,
      reference is made to the following Transaction Documents: (i) that
      certain Debenture in the original principal amount of $8,000,000 dated November
      2, 2005 and that certain Debenture in the original principal amount of
      $4,375,000 dated February 1, 2006, each issued by the Company to DK (as
      amended, modified and/or supplemented, the “DK
      Debentures”);
      and
      (ii) that
      certain Debenture in the original principal amount of $625,000, dated
      February 1, 2006, issued by the Company to KVF (as amended, modified and/or
      supplemented, the “KVF
      Debenture;”
      together with the DK Debentures, the “Debentures”);
      and

    

    WHEREAS,
      the Investors have agreed effective as of the date hereof to extend the Maturity
      Date of the Debentures, and, in consideration thereof, the Company has agreed
      to
      issue to the Investors an aggregate of three million nine hundred thousand
      (3,900,000) unregistered, restricted shares of common stock of the Company
      (the
“New
      Shares”),
      allocated between the Investors as set forth on Schedule
      1
      attached
      hereto;

    

    NOW,
      THEREFORE, in consideration of the above, and for other good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      each
      of the Company, the Investors and the Agent agree as follows:

    

    1.         
      Amendment
      to Debentures.
      Each of
      the Debentures is hereby amended by extending the “Maturity Date,” as such term
      is defined in each Debenture, from September 4, 2006 to December 4, 2006. For
      the avoidance of doubt, the Maturity Date under each of the Debentures is hereby
      restated as December 4, 2006.

    

    2. 
New
      Shares.
      Immediately following the execution and delivery of this Agreement by each
      of
      the Company, the Investors and the Agent, the Company hereby 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    agrees
      to
      issue to the Investors the New Shares in the amounts specified on Schedule
      1
      hereto,
      subject to securities laws legends applicable to transactions of this type.
      Each
      of the Investors, severally, hereby represents, warrants, and acknowledges
      to
      the Company that (a) the New Shares are being acquired for the account of such
      Investor, for purposes of investment, and not with a view to the distribution
      thereof, as those terms are used in the Securities Act of 1933, as amended
      (the
      "Securities
      Act"),
      and
      the rules and regulations promulgated thereunder; (b) such Investor has
      sufficient knowledge and experience in financial and business matters so as
      to
      be capable of evaluating the merits and risks of its investment decision to
      acquire the New Shares pursuant to the terms of this Agreement; (c) such
      Investor has received copies of such documents and such other information as
      it
      has deemed necessary in order to make an informed investment decision with
      respect to the purchase of the New Shares; (d) such Investor understands, and
      has the financial capability of assuming, the economic risk of an investment
      in
      the New Shares for an indefinite period of time; and (e) no broker, agent,
      dealer or finder of any kind has been retained in connection with this Agreement
      (and the Company shall not be responsible for, and such Investor shall indemnify
      the Company for, any compensation of any kind which might be claimed as owing
      to
      any of such third parties). 

    

    3. 
Common
      Stock Sale Limitation.
      Notwithstanding anything contained herein to the contrary (including, without
      limitation, the provisions of Section 8 hereof), the Investors shall not be
      entitled to sell any New Shares, in whole or in part, prior to the date that
      is
      three hundred sixty five (365) days after the date hereof (the “Lock-up
      Period”).
      Notwithstanding the forgoing, the Lock-up Period shall become null and void
      without any notice to the Company upon the occurrence and during the continuance
      of an Event of Default (as defined in the 2005 Loan Documents). 

    

    4. 
Effective
      Date.
      The
      transactions contemplated hereby shall be effective as of the date first above
      written (the “Effective
      Date”),
      when
      each of the following conditions has been satisfied: (i) each of the Company,
      the Investors and the Agent shall have executed, and the Company shall have
      delivered to each of the Investor its respective counterpart to, this Agreement,
      (ii) the issuance by the Company to the Investors of the New Shares, and the
      receipt by the Investors of the stock certificates evidencing the New Shares,
      shall have occurred, and (iii) the transactions contemplated by Section 7,
      below, shall have occurred. 

    

    5. 
Affect
      of Amendment.
      Except
      as specifically set forth in this Agreement, there are no other amendments,
      modifications or waivers to the 2005 Loan Documents, and all of the other forms,
      terms and provisions of the 2005 Loan Documents remain in full force and effect.
      From and after the Effective Date, all references in the 2005 Loan Documents
      to
      the Debentures shall be deemed to be references to Debentures, as amended
      hereby, and all references in the 2005 Loan Documents to the Maturity Date
      shall
      be deemed to be references to the Maturity Date set forth in Section 1 of this
      Agreement. 

    

    6. 
Representations
      by the Company.
      The
      Company hereby represents and warrants to the Investors that (i) no Event of
      Default (as defined in the 2005 Loan

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Documents)
      exists and is continuing on the date hereof, (ii) on the date hereof, all
      representations and warranties made by the Company in the 2005 Loan Documents
      are in all material respects true, correct and complete as of the date hereof
      as
      if made as of the date hereof, except for those representations and warranties
      which were made as of a date certain, which such representations and warranties
      were true, correct and complete as of the respective dates made. 

    

    7. 
Other
      Agreements; Waivers; Consent.
      The
      Investors and the Agent hereby acknowledge that commensurate with the parties’
execution and delivery of this Agreement and the consummation of the
      transactions contemplated hereby, the Company will be entering into similar
      arrangements with Laurus Master Fund, Ltd (“Laurus”)
      to (i)
      extend the maturity date of the Company’s outstanding secured notes to Laurus
      (the “Laurus
      Notes”)
      from
      August 1, 2006 to November 1, 2006, (ii) increase the interest rate under the
      Laurus Notes commencing August 2, 2006 to 10% per annum, and (iii) issue to
      Laurus an aggregate of 1,500,000 shares of Company common stock (the
“Laurus
      New Shares”)
      with
      substantially the same rights and restrictions as are set forth herein with
      respect to the New Shares (such transactions hereinafter being referred to
      as
      the “Laurus
      Amendment Transactions”).
      In
      connection with the transactions contemplated by this Agreement and the Laurus
      Amendment Transactions, each of the Investors and the Agent hereby consents
      to
      the Laurus Amendment Transactions.

    

    8.         
      Piggy-Back
      Registration Rights.
      The
      Company hereby agrees that if at any time before the New Shares may be sold
      by
      the Investors pursuant to Rule 144(k) promulgated under the Securities Act,
      there is not an effective registration statement covering all of the New Shares
      and the Company shall determine to prepare and file with the Securities and
      Exchange Commission a registration statement relating to an offering for its
      own
      account or the account of others under the Securities Act, of any of its equity
      securities, other than on Form S-4 or Form S-8 (each as promulgated under
      the Securities Act) or their then equivalents relating to equity securities
      to
      be issued solely in connection with any acquisition of any entity or business
      or
      equity securities issuable in connection with stock option or other employee
      benefit plans, then the Company shall send to DK (on behalf of the Investors)
      written notice of such determination and, if within fifteen (15) days of DK’s
      receipt of such notice, Investors holding an aggregate of in excess of 50%
      of
      the New Shares so request in writing that their New Shares be included in such
      registration statement, the Company shall include in such registration statement
      all or any part of such New Shares not otherwise subject to an effective
      registration statement and requested by DK on behalf of the Investors to be
      included in such registration statement, to the extent the Company may do so
      without violating registration rights of others which exist as of the date
      of
      this Agreement, subject to customary underwriter cutbacks applicable to all
      holders of registration rights and subject to the Investors’ delivery to the
      Company of all customary representations, waivers and indemnities applicable
      to
      selling stockholders in a registration statement. For avoidance of doubt, the
      registration rights provided to the Investors hereunder will rank pari
      passu
      with the
      registration rights to be provided by the Company to Laurus in respect to the
      Laurus New Shares to be issued by the Company as contemplated by Section 7
      hereof.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    9.         
      Form
      8-K.
      The
      Company hereby agrees to file a Current Report on Form 8-K, completed as
      appropriate, with the Securities and Exchange Commission disclosing the terms
      and conditions set forth in this Agreement as soon as practicable, but no later
      than the fourth (4th)
      business day following the date hereof. 

    

    10.       
      Binding
      Affect.
      This
      Agreement shall be binding upon the parties hereto and their respective
      successors and permitted assigns and shall inure to the benefit of and be
      enforceable by each of the parties hereto and its successors and permitted
      assigns. THIS
      AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY
      THE
      LAW OF THE STATE OF NEW YORK.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original, but all of which shall constitute one instrument. 

     

     

    
 

    [Intentionally
      Left Blank - Signature Page Follows]

    
 

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    

    IN
      WITNESS WHEREOF,
      each of
      the Company, the Investors and the Agent has caused this Agreement to be signed
      in its name as of the date first above written.

     

     

    DSL.NET,
      INC.

    

    By:
      /s/
      David F.
      Struwas                            
   

    Name:
      David F. Struwas

    Title:
      President & CEO

    

    

     

    

    DUNKNIGHT
      TELECOM PARTNERS LLC (individually and as Administrative
      Agent)

     

    

    By:
      /s/
      Keir
      Kleinknecht                            
   

    Name:
      Keir Kleinknecht

    Title:
      Sole Managing Member

    

    KNIGHT
      VISION FOUNDATION

     

    

    By:
      /s/
      Peter
      Kleinknecht                          
   

    Name:
      Peter Kleinknecht

    Title:
      President

     

     

     

    Agreed
      and acknowledged:

     

    Laurus
      Master Fund, Ltd,
      as
      First
      Lien Lender, pursuant to the Subordination
      Agreement

     

    By:
      /s/ David
      Grin                                       

Name: David Grin

    Title:
      Director

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
 

    Schedule
      1

    

    Allocation
      of New Shares

    

    

      
        	
                Investor:

              	
                New
                  Shares Allocation:

              
	 	 
	
                DunKnight
                  Telecom Partners LLC

              	
                3,712,500
                  shares

              
	 	 
	
                Knight
                  Vision Foundation

              	
                187,500
                  shares

              

      

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        6

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