Exhibit 10.3

SECURITY AND PLEDGE AGREEMENT

This SECURITY AND PLEDGE AGREEMENT dated as of April 13, 2007, by and among
DynTek, Inc., a Delaware corporation (the “Company), DynTek Services, Inc., a
Delaware corporation (the “Subsidiary” and, together with the Company, the
“Debtors”), and Trust A-4 - Lloyd I. Miller, a purchaser under that certain
Purchase Agreement (as hereinafter defined) (the “Purchaser”).  Certain defined
terms are set forth in Article 10 hereof.

Recitals

WHEREAS, the Company and the Purchaser are parties to a Junior Secured
Convertible Note Purchase Agreement dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time)  (the “Purchase
Agreement”); and

WHEREAS, it is a condition to the Purchaser’s obligation to enter into the
Purchase Agreement and to extend credit to the Company thereunder that the
Debtors execute and deliver this Security and Pledge Agreement as security for
the payment and performance of all obligations of the Debtors to the Purchaser
and to guarantee all of the obligations of the Debtors under the Purchase
Agreement and this Agreement.

NOW, THEREFORE, in consideration of the premises contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

ARTICLE 1.

GRANT OF SECURITY

Section 1.1                                   Grant of Security.  The Debtors
hereby grant to the Purchaser a lien and continuing security interest (“Security
Interest”) in and to, and a right of set-off against, all of the following
personal property and fixtures of the Debtors, whether now owned by or owing to,
or hereafter acquired by or arising in favor of, such Debtor (including under
any trade names, styles or derivations thereof), and whether owned or consigned
by or to, or leased from or to, such Debtor, and regardless of where located
(all of which being hereinafter collectively referred to as the “Collateral”):

(a)                                  all Accounts;

(B)                                 ALL CHATTEL PAPER;

(C)                                  ALL DOCUMENTS;

(D)           ALL GENERAL INTANGIBLES (INCLUDING MARKS, COPYRIGHTS, PATENTS,
PAYMENT INTANGIBLES, PROPRIETARY

INFORMATION AND TRADE SECRETS);

(E)                                  ALL GOODS (INCLUDING INVENTORY, EQUIPMENT
AND FIXTURES);

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(F)                                    ALL INSTRUMENTS;

(G)                                 ALL INVESTMENT PROPERTY, INCLUDING (I) ALL
SHARES OF THE CAPITAL STOCK OR MEMBERSHIP INTERESTS OF EACH SUBSIDIARY OWNED OR
HELD BY EACH DEBTOR, WHETHER NOW OWNED OR HEREAFTER FORMED OR ACQUIRED (THOSE
SHARES AND MEMBERSHIP INTERESTS BEING LISTED AND DESCRIBED ON SCHEDULE A
ATTACHED HERETO), AND ALL SUBSTITUTIONS AND ADDITIONS TO SUCH SHARES (HEREIN,
THE “PLEDGED SECURITIES”), (II) ALL DIVIDENDS, DISTRIBUTIONS, AND SUMS
DISTRIBUTABLE OR PAYABLE FROM, UPON OR IN RESPECT OF THE PLEDGED SECURITIES, AND
(III) ALL OTHER RIGHTS AND PRIVILEGES INCIDENT TO THE PLEDGED SECURITIES (ALL OF
THE FOREGOING BEING HEREINAFTER REFERRED TO COLLECTIVELY AS THE “STOCK
COLLATERAL”);

(H)                                 ALL DEPOSIT ACCOUNTS OF SUCH DEBTOR,
INCLUDING ALL BLOCKED ACCOUNTS, CONCENTRATION ACCOUNTS, DISBURSEMENT ACCOUNTS,
AND ALL OTHER BANK ACCOUNTS AND ALL DEPOSITS THEREIN;

(I)                                     ALL MONEY, CASH OR CASH EQUIVALENTS OF
SUCH DEBTOR;

(J)                                     ALL SUPPORTING OBLIGATIONS AND
LETTER-OF-CREDIT RIGHTS OF SUCH DEBTOR;

(K)                                  THE COMMERCIAL TORT CLAIMS IDENTIFIED ON
SCHEDULE B HERETO; AND

(L)            TO THE EXTENT NOT OTHERWISE INCLUDED, ALL PROCEEDS, TORT CLAIMS,
INSURANCE CLAIMS AND OTHER RIGHTS TO PAYMENTS NOT OTHERWISE INCLUDED IN THE
FOREGOING AND PRODUCTS OF THE FOREGOING AND ALL OTHER TANGIBLE AND INTANGIBLE
PERSONAL PROPERTY WHATSOEVER OF ANY DEBTOR INCLUDING ALL CASH, PRODUCTS,
OFFSPRING, RENTS, REVENUES, ISSUES, PROFITS, ROYALTIES, INCOME, BENEFITS,
ACCESSIONS, ADDITIONS, SUBSTITUTIONS AND REPLACEMENTS OF AND TO ANY AND ALL OF
THE FOREGOING, INCLUDING ALL PROCEEDS OF AND TO ANY OF THE PROPERTY OF ANY OF
THE DEBTORS DESCRIBED IN THE PRECEDING PARAGRAPHS OF THIS SECTION 1.1
(INCLUDING, WITHOUT LIMITATION, ANY LOSS PROCEEDS OR OTHER PROCEEDS OF INSURANCE
THEREON (WHETHER OR NOT ANY NOTE PURCHASER IS LOSS PAYEE THEREOF), AND ANY
INDEMNITY, WARRANTY OR GUARANTEE, PAYABLE BY ANY REASON OF LOSS OR DAMAGE TO OR
OTHERWISE WITH RESPECT TO ANY OF THE FOREGOING, AND ALL CAUSES OF ACTION, CLAIMS
AND WARRANTIES NOW OR HEREAFTER HELD BY ANY DEBTOR IN RESPECT OF ANY OF THE
ITEMS LISTED ABOVE);

provided, however, that a Security Interest in the Purchased Assets (as that
term is defined by the Asset Purchase Agreement and Liability Assumption
Agreement and the Asset Purchase Agreement, each dated as of August 8, 2005 (the
“NETF Agreements”), among the Debtors and New England Technology Finance, LLC, a
Delaware limited liability company) is not granted under this Agreement if the
grant of a Lien in such Purchased Assets or in the manner contemplated by this
Agreement is prohibited by the terms of the NETF Agreements, but only to the
extent that any such prohibition is not rendered ineffective pursuant to the
Uniform Commercial Code of the State of California or any other applicable law;
provided further, however, that with respect to the Purchased Assets described
in the preceding clause that are excluded from the Collateral by virtue of the
NETF Agreements, such Purchased Assets shall be excluded from the Collateral
only to the extent and for so long as this Agreement conflicts with the NETF
Agreements and the NETF Agreements continues validly to prohibit the creation of

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such security interest pursuant to this Agreement, and upon the expiration of
such prohibition, the Purchased Assets shall automatically be included in the
Collateral, without further action on the part of any Debtor or Purchaser;
provided further, however, that the Security Interest granted hereunder in and
to, and the right of set-off against, the Collateral shall be junior and
subordinated to any security interest granted to SACC Partners, L.P. and Lloyd
I. Miller, III (collectively the “Senior Lenders”) under that certain Security
and Pledge Agreement, dated as of March 8, 2006, as amended (the “Senior
Security Agreement”), issued pursuant to that certain Note Purchase Agreement,
dated as of March 8, 2006, as amended.

Section 1.2                                   Security for Obligations.  This
Agreement and the Security Interest shall secure the payment and performance of
the Obligations.

ARTICLE 2

GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

Each Debtor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:

Section 2.1                                   Necessary Filings.  All financing
statements necessary or appropriate to perfect the security interest granted by
each Debtor to the Purchaser hereby in respect of the Collateral, which can be
perfected by the filing of a financing statement, have been filed and the
Security Interest granted to the Purchaser pursuant to this Agreement in and to
such Collateral constitutes a perfected Security Interest therein (to the extent
that the same can be perfected by filing) prior to the rights of all other
persons or entities therein (other than any such rights pursuant to the
Permitted Liens) and subject to no other Liens (other than Permitted Liens) and
is entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code of the State of Delaware to perfected security interests.

Section 2.2                                   No Liens.  Each Debtor is, and as
to Collateral acquired by it from time to time after the date hereof such Debtor
will be, the owner of all Collateral pledged by it hereunder free from any lien,
security interest, encumbrance or other right, title or interest of any person
or entity (collectively, the “Liens”) (other than Permitted Liens), and each
Debtor shall defend the Collateral against all claims and demands of all persons
or entities at any time claiming the same or any interest therein (other than in
connection with Permitted Liens) adverse to the Purchaser.

Section 2.3                                   Other Financing Statements.  To
the best knowledge of each Debtor, as of the date hereof, there is no financing
statement covering or purporting to cover any interest of any kind in the
Collateral (other than the financing statements filed in respect of Permitted
Liens), and so long as any Obligations or commitments with respect thereto are
outstanding, no Debtor will execute or authorize to be filed in any public
office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except financing statements filed or to be filed in respect of and
covering the security interests granted hereby by such Debtor or in connection
with Permitted Liens.

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Section 2.4                                   Chief Executive Office; Records.

(a)                                  As of the date hereof, the chief executive
office of each Debtor is located at the address indicated on Schedule C hereto
for such Debtor.  No Debtor will move its chief executive office except to such
new location as such Debtor may establish in accordance with the last sentence
of this Section 2.4. A complete set of books of account and records of each
Debtor relating to the Accounts, Chattel Paper and Documents are, and will
continue to be, kept at such chief executive office, at one or more of the other
record locations set forth on Schedule C hereto for such Debtor or at such new
locations as such Debtor may establish in accordance with the last sentence of
this Section 2.4.

(b)                                 All Accounts, Chattel Paper and Documents of
each Debtor are, and will continue to be, maintained at, and controlled and
directed (including, without limitation, for general accounting purposes) from,
the office locations described above or such new location established in
accordance with the last sentence of this Section 2.4.  No Debtor shall
establish new locations for such offices until (a) it shall have given to the
Purchaser not less than 30 days’ prior written notice of its intention to do so,
clearly describing such new location and providing such other information in
connection therewith as the Purchaser may reasonably request and (b) with
respect to such new location, it shall have taken all action reasonably
satisfactory to the Purchaser, to maintain the security interest of the
Purchaser in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect.

Section 2.5                                   Location of Inventory and
Equipment.  As of the date hereof, all Inventory and Equipment held by each
Debtor is located at one of the locations shown on Schedule D hereto.  Each
Debtor agrees that all Inventory and Equipment now held or subsequently acquired
by it shall be kept at (or shall be in transport to) any one of the locations
shown on Schedule D hereto, or such new location as such Debtor may establish in
accordance with the last sentence of this Section 2.5.  Each Debtor may
establish a new location for Inventory and Equipment in a jurisdiction in which
such Debtor currently does business and with respect to which the Purchaser has
a first perfected security interest in such Inventory and Equipment (subject to
Permitted Liens).  Each Debtor may establish a new location outside of a
jurisdiction in which it currently does business and with respect to which the
Purchaser has a first perfected security interest in such Inventory and
Equipment only if (a) it shall have given to the Purchaser not less than 30
days’ prior written notice of its intention so to do, clearly describing such
new location and providing such other information in connection therewith as the
Purchaser may reasonably request and (b) with respect to such new location, it
shall have taken all action reasonably satisfactory to the Purchaser to maintain
the security interest of the Purchaser in the Collateral intended to be granted
hereby at all times fully perfected and in full force and effect.

Section 2.6                                   Recourse.  This Agreement is made
with full recourse to each Debtor and pursuant to and upon all the warranties,
representations, covenants and agreements on the part of each Debtor contained
herein, in the Purchase Agreement and otherwise in writing in connection
herewith or therewith.

Section 2.7                                   Trade Names; Change of Name.  Each
Debtor’s legal name, jurisdiction of organization and organizational number (if
any) are correctly set forth under Column 1 on

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SCHEDULE E OF THIS AGREEMENT.  NO DEBTOR HAS TRANSACTED BUSINESS AT ANY TIME
DURING THE IMMEDIATELY PRECEDING FIVE YEAR PERIOD, AND DOES NOT CURRENTLY
TRANSACT BUSINESS, UNDER ANY OTHER LEGAL NAMES OR TRADE NAMES OTHER THAN THE
PRIOR LEGAL NAMES AND TRADE NAMES (IF ANY) SET FORTH ON SCHEDULE E ATTACHED
HERETO.  NO DEBTOR SHALL CHANGE ITS JURISDICTION OF ORGANIZATION WITHOUT THE
PURCHASER’S PRIOR WRITTEN CONSENT.  NO DEBTOR SHALL CHANGE ITS LEGAL NAME OR
TRANSACT BUSINESS UNDER ANY OTHER TRADE NAME WITHOUT FIRST GIVING 30 DAYS’ PRIOR
WRITTEN NOTICE OF ITS INTENT TO DO SO TO THE PURCHASER.  WITH RESPECT TO SUCH
NEW NAME OR JURISDICTION OF ORGANIZATION, SUCH DEBTOR SHALL HAVE TAKEN ALL
ACTION REASONABLY REQUESTED BY THE PURCHASER, TO MAINTAIN THE SECURITY INTEREST
AT ALL TIMES FULLY PERFECTED AND IN FULL FORCE AND EFFECT.

ARTICLE 3

SPECIAL PROVISIONS CONCERNING

ACCOUNTS; INSTRUMENTS

Section 3.1                                   Additional Representations and
Warranties.  As of the time when each of its Accounts arises, each Debtor shall
be deemed to have represented and warranted that such Account, and all records,
papers and documents relating thereto are what they purport to be in all
material respects, and that such Account will, to the best knowledge of each
Debtor, evidence true and valid obligations of the account debtor named therein.

Section 3.2                                   Maintenance of Records.  Each
Debtor will keep and maintain at its own cost and expense, records of its
Accounts and each Debtor will make the same available on such Debtor’s premises
to the Purchaser for inspection, at such Debtor’s own cost and expense, at any
and all commercially reasonable times upon commercially reasonable prior notice
to such Debtor.  Upon the occurrence and during the continuance of an Event of
Default and at the commercially reasonable request of the Purchaser, each Debtor
shall, at its own cost and expense, deliver all tangible evidence of its
Accounts, including, without limitation, all documents evidencing the Accounts)
and such books and records to the Purchaser or to its representatives (copies of
which evidence and books and records may be retained by each Debtor).  If the
Purchaser so directs, upon the occurrence and during the continuance of an Event
of Default, each Debtor shall legend, in form and manner satisfactory to the
Purchaser, the Accounts, as well as books, records and documents of such Debtor
evidencing or pertaining to such Receivables and Contracts with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Purchaser and that the Purchaser has a security interest therein.

Section 3.3                                   Direction to Account Debtors;
Contracting Parties; Etc.  Upon the occurrence and during the continuance of an
Event of Default, and if the Purchaser so directs each Debtor if such Debtor
does not have a Senior Lender, each Debtor agrees (a) to cause all payments on
account of the Accounts, Deposit Accounts or General Intangibles to be made
directly to the Cash Collateral Account, (b) that the Purchaser may, at its
option, directly notify the obligors with respect to any Accounts, Deposit
Accounts or General Intangibles to make payments with respect thereto as
provided in preceding clause (a) and (c) that the Purchaser may enforce
collection of any such Accounts, Deposit Accounts or General Intangibles and may
adjust, settle or compromise the amount of payment thereof, in the same manner
and to the same extent as such Debtor.  Without notice to or assent by each
Debtor, the Purchaser may apply any

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OR ALL AMOUNTS THEN IN, OR THEREAFTER DEPOSITED IN, THE CASH COLLATERAL ACCOUNT
WHICH APPLICATION SHALL BE EFFECTED IN THE MANNER PROVIDED IN SECTION 9.4 OF
THIS AGREEMENT.  THE REASONABLE COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS’ FEES) OF COLLECTION, WHETHER INCURRED BY SUCH DEBTOR OR THE
PURCHASER, SHALL BE BORNE BY SUCH DEBTOR.  THE PURCHASER SHALL DELIVER A COPY OF
EACH NOTICE REFERRED TO IN THE PRECEDING CLAUSE (B) TO SUCH DEBTOR; PROVIDED,
THAT THE FAILURE BY THE PURCHASER TO SO NOTIFY SUCH DEBTOR SHALL NOT AFFECT THE
EFFECTIVENESS OF SUCH NOTICE OR THE OTHER RIGHTS OF THE PURCHASER CREATED BY
THIS SECTION 3.3.

Section 3.4                                   Modification of Terms; etc.  No
Debtor shall rescind or cancel any indebtedness evidenced by any Account, or
modify any term thereof or make any adjustment with respect thereto, or extend
or renew the same, or compromise or settle any material dispute, claim, suit or
legal proceeding relating thereto, or sell any Account, or interest therein,
without the prior written consent of the Purchaser, except in accordance with
such Debtor’s commercially reasonable business practices.

Section 3.5                                   Collection. Each Debtor shall
endeavor in accordance with commercially reasonable business practices to cause
to be collected from the account debtor named in each of its Accounts, as and
when due (including, without limitation, amounts which are delinquent, such
amounts to be collected in accordance with generally accepted lawful collection
procedures) any and all amounts owing under or on account of such Accounts and
apply forthwith upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Account.  The reasonable costs and expenses
(including, without limitation, attorneys’ fees) of collection, if incurred by
each Debtor or the Purchaser, shall be borne by such Debtor.

Section 3.6                                   Instruments.  If a Debtor owns or
acquires any Instrument constituting Collateral, at Purchaser’s request upon the
occurrence and during the continuation of an Event of Default and if such Debtor
does not have a Senior Lender, such Debtor will promptly deliver such Instrument
to the Purchaser appropriately endorsed to the order of the Purchaser as further
security hereunder.  At the Purchaser’s request, such Debtor that owns or
acquires any other Instrument constituting Collateral will, within 5 business
days, promptly deliver such Instrument to the Purchaser appropriately endorsed
to the order of the Purchaser as further security hereunder.

ARTICLE 4

SPECIAL PROVISIONS CONCERNING MARKS

Section 4.1                                   Additional Representations and
Warranties.  Each Debtor represents and warrants that, as of the date hereof, it
is the true and lawful owner of all right, title and interest to or otherwise
has the right to use the registered Marks listed in Schedule F hereto and that,
as of the date hereof said listed Marks constitute all the marks and
applications for marks registered in the United States Patent and Trademark
Office that such Debtor presently owns or uses in connection with its business. 
Each Debtor represents and warrants that it owns, is licensed to use or
otherwise has the right to use all material Marks that it uses.  Each Debtor
further warrants that it has no knowledge of any third party claim that any
aspect of such Debtor’s present or contemplated business operations infringes or
will infringe any trademark,

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SERVICE MARK OR TRADE NAME IN ANY RESPECT WHICH COULD REASONABLY BE EXPECTED TO
HAVE A MATERIAL ADVERSE EFFECT ON THE BUSINESS, OPERATIONS, PROPERTY, ASSETS,
LIABILITIES OR CONDITION (FINANCIAL OR OTHERWISE) OF SUCH DEBTOR.  EACH DEBTOR
REPRESENTS AND WARRANTS THAT EXCEPT AS LISTED ON SCHEDULE F, AS OF THE DATE
HEREOF IT IS THE BENEFICIAL AND RECORD OWNER OF ALL TRADEMARK REGISTRATIONS AND
APPLICATIONS LISTED IN SCHEDULE F HERETO AND THAT SAID REGISTRATIONS ARE VALID
AND SUBSISTING, AND THAT NO DEBTOR IS AWARE OF ANY THIRD-PARTY CLAIM THAT ANY OF
SAID REGISTRATIONS IN RESPECT OF ANY MATERIAL MARK IS INVALID OR UNENFORCEABLE. 
EACH DEBTOR HEREBY GRANTS TO THE PURCHASER AN ABSOLUTE POWER OF ATTORNEY TO
SIGN, UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, ANY
DOCUMENT WHICH MAY BE REQUIRED BY THE UNITED STATES PATENT AND TRADEMARK OFFICE
IN ORDER TO EFFECT AN ABSOLUTE ASSIGNMENT OF ALL RIGHT, TITLE AND INTEREST IN
EACH MARK, AND RECORD THE SAME; PROVIDED THAT SUCH POWER OF ATTORNEY MAY BE
EXERCISED ONLY IF SUCH DEBTOR DOES NOT HAVE A SENIOR LENDER.

Section 4.2                                   Infringements.  Each Debtor
agrees, promptly upon learning thereof, to notify the Purchaser in writing of
the name and address of, and to furnish such pertinent information that may be
available with respect to, any party who such Debtor believes is infringing or
diluting or otherwise violating in any material respect any of such Debtor’s
rights in and to any material Mark, or with respect to any party claiming that
such Debtor’s use of any material Mark violates in any material respect any
property right of that party.  Each Debtor further agrees to prosecute any
Person infringing any material Mark in accordance with commercially reasonable
business practices.

Section 4.3                                   Preservation of Marks.  Each
Debtor agrees to use its Marks as required in each of the applicable
jurisdictions during the time in which this Agreement is in effect, sufficiently
to preserve such Marks (and any registrations thereto) as trademarks or service
marks under the laws of the United States and any other applicable law;
provided, that, prior to any Default, no Debtor shall be obligated to preserve
any Mark in the event such Debtor determines, in its commercially reasonable
business judgment, that the preservation of such Mark is no longer desirable in
the conduct of its business.

Section 4.4                                   Maintenance of Registration.  Each
Debtor shall, at its own expense, diligently process all documents required by
the Trademark Act of 1946, 15 U.S.C. §§ 1051 et seq. to maintain trademark
registrations, including but not limited to affidavits of use and applications
for renewals of registration in the United States Patent and Trademark Office
for all of its registered Marks pursuant to 15 U.S.C. §§ 1058(a), 1059 and 1065,
and shall pay all fees and disbursements in connection therewith and shall not
abandon any such filing of affidavit of use or any such application of renewal
prior to the exhaustion of all administrative and judicial remedies without
prior written consent of the Purchaser; provided, that, prior to any Default, no
Debtor shall be obligated to maintain any Mark in the event that such Debtor
determines, in its commercially reasonable business judgment, that the
maintenance of such Mark is no longer necessary or desirable in the conduct of
its business.

Section 4.5                                   Future Registered Marks.  If any
Mark registration issues hereafter to a Debtor as a result of any application
now or hereafter pending before the United States Patent and Trademark Office,
within 60 days of receipt of such certificate, such Debtor shall deliver to the
Purchaser a copy of such certificate, and an assignment for security in such
Mark, to the

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PURCHASER AND AT THE EXPENSE OF SUCH DEBTOR, CONFIRMING THE ASSIGNMENT FOR
SECURITY IN SUCH MARK TO THE PURCHASER HEREUNDER, IN SUCH FORM AS MAY BE
REASONABLY SATISFACTORY TO THE PURCHASER.

Section 4.6                                   Remedies.  If an Event of Default
shall occur and be continuing, the Purchaser may take any or all of the
following actions if such Debtor does not have a Senior Lender:  (a) declare the
entire right, title and interest of such Debtor in and to each of the Marks,
together with all trademark rights and rights of protection to the same, vested
in the Purchaser for the benefit of the Purchaser, in which event the rights,
title and interest shall immediately vest, in the Purchaser for the benefit of
the Purchaser, and the Purchaser shall be entitled to exercise the power of
attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged
and notarized and record said absolute assignment with the applicable agency;
(b) take and use or sell the Marks and the goodwill of such Debtor’s business
symbolized by the Marks and the right to carry on the business and use the
assets of such Debtor in connection with which the Marks have been used; and (c)
direct such Debtor to refrain, in which event such Debtor shall refrain, from
using the Marks in any manner whatsoever, directly or indirectly, and, if
requested by the Purchaser, change such Debtor’s corporate name to eliminate
therefrom any use of any Mark and execute such other and further documents that
the Purchaser may request to further confirm this and to transfer ownership of
the Marks and registrations and any pending trademark application in the United
States Patent and Trademark Office to the Purchaser.

Section 4.7                                   Collateral Assignment.  This
Agreement is made for collateral security purposes only.  This Agreement and
Purchaser’s Security Interest in the Marks shall continue in full force and
effect as long as any Obligations shall be owed to the Purchaser (or any of said
Purchaser).  Upon payment in full of the Obligations and termination of the
Purchase Agreement, this Agreement shall terminate and Purchaser shall promptly
execute and deliver to each Debtor, at such Debtor’s expense, all termination
statements and other instruments as may be necessary or proper to terminate
Purchaser’s security interest in the Marks, subject to any disposition thereof
which may have been made by Purchaser pursuant to this Agreement or the Purchase
Agreement.

ARTICLE 5

SPECIAL PROVISIONS CONCERNING

PATENTS, COPYRIGHTS AND TRADE SECRETS

Section 5.1                                   Additional Representations and
Warranties.  Each Debtor represents and warrants that, as of the date hereof, it
is the true and lawful owner of all rights in (a) all material Trade Secrets and
Proprietary Information necessary to operate the business of such Debtor, (b)
the Patents listed in Schedule G hereto for the Debtor and that said Patents
constitute all the patents and applications for patents that the Debtor owns on
the date hereof and (c) the Copyrights listed in Schedule H hereto and that said
Copyrights constitute all registrations of copyrights and applications for
copyright registrations that such Debtor owns on the date hereof.  Each Debtor
further warrants that it has no knowledge of any third party claim that any
aspect of such Debtor’s present or contemplated business operations infringes or
will infringe any patent or any copyright or such Debtor has misappropriated any
Trade Secret or Proprietary Information, in

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EACH CASE IN ANY RESPECT WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT ON THE BUSINESS, OPERATIONS, PROPERTY, ASSETS, LIABILITIES OR
CONDITION (FINANCIAL OR OTHERWISE) OF SUCH DEBTOR.  EACH DEBTOR HEREBY GRANTS TO
THE PURCHASER AN ABSOLUTE POWER OF ATTORNEY TO SIGN, UPON THE OCCURRENCE AND
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, ANY DOCUMENT WHICH MAY BE
REQUIRED BY THE UNITED STATES PATENT AND TRADEMARK OFFICE OR THE UNITED STATES
COPYRIGHT OFFICE IN ORDER TO EFFECT AN ABSOLUTE ASSIGNMENT OF ALL RIGHT, TITLE
AND INTEREST IN EACH PATENT AND COPYRIGHT, AND TO RECORD THE SAME; PROVIDED THAT
SUCH POWER OF ATTORNEY MAY BE EXERCISED ONLY IF SUCH DEBTOR DOES NOT HAVE A
SENIOR LENDER.

Section 5.2                                   Infringements. Each Debtor agrees,
promptly upon learning thereof, to furnish the Purchaser in writing with all
pertinent information available to such Debtor with respect to any infringement,
contributing infringement or active inducement to infringe in any material
respect any material Patent or Copyright or to any claim that the practice of
any material Patent or the use of any material Copyright violates in any
material respect any property right of a third party, or with respect to any
misappropriation of any material Trade Secret Right or any claim that practice
of any material Trade Secret Right violates in any material respect any property
right of a third party.  Each Debtor further agrees, to the extent consistent
with commercially reasonable business practices, to prosecute any Person
infringing any Patent or Copyright or any Person misappropriating any Trade
Secret Right.

Section 5.3                                   Maintenance of Patents.  At its
own expense, each Debtor shall make timely payment of all post-issuance fees
required pursuant to 35 U.S.C. § 41 to maintain in force rights under each
Patent, absent prior written consent of the Purchaser; provided, that no Debtor
shall be obligated to maintain any Patent in the event such Debtor determines,
in its commercially reasonable business judgment, that the maintenance of such
Patent is no longer necessary or desirable in the conduct of its business.

Section 5.4                                   Prosecution of Patent
Application.  At its own expense, each Debtor shall diligently prosecute all
applications for Patents for such Debtor and shall not abandon any such
application prior to exhaustion of all administrative and judicial remedies,
absent written consent of the Purchaser; provided, that no Debtor shall be
obligated to prosecute any application in the event such Debtor determines, in
its commercially reasonable business judgment, that the prosecuting of such
application is no longer necessary or desirable in the conduct of its business.

Section 5.5                                   Other Patents and Copyrights. 
Within 60 days of the acquisition or issuance of a Patent, registration of a
Copyright, or acquisition of a registered copyright, each Debtor shall deliver
to the Purchaser a copy of said Copyright or certificate or registration of said
Patents, as the case may be, with an assignment for security as to such Patent
or Copyright, as the case may be, to the Purchaser and at the expense of such
Debtor, confirming the assignment for security, in such form as may be
reasonably satisfactory to the Purchaser.

Section 5.6                                   Remedies.  If an Event of Default
shall occur and be continuing, the Purchaser may take any or all of the
following actions if a Debtor does not have a Senior Lender:  (a) declare the
entire right, title, and interest of such Debtor in each of the Patents and
Copyrights vested in the Purchaser for the benefit of the Purchaser, in which
event such right, title, and interest shall immediately vest in the Purchaser
for the benefit of the Purchaser, in which case the

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PURCHASER SHALL BE ENTITLED TO EXERCISE THE POWER OF ATTORNEY REFERRED TO IN
SECTION 5.1 HEREOF TO EXECUTE, CAUSE TO BE ACKNOWLEDGED AND NOTARIZED AND TO
RECORD SAID ABSOLUTE ASSIGNMENT WITH THE APPLICABLE AGENCY; (B) TAKE AND
PRACTICE OR SELL THE PATENTS AND COPYRIGHTS; AND (C) DIRECT SUCH DEBTOR TO
REFRAIN, IN WHICH EVENT SUCH DEBTOR SHALL REFRAIN, FROM PRACTICING THE PATENTS
AND USING THE COPYRIGHTS DIRECTLY OR INDIRECTLY, AND SUCH DEBTOR SHALL EXECUTE
SUCH OTHER AND FURTHER DOCUMENTS AS THE PURCHASER MAY REQUEST FURTHER TO CONFIRM
THIS AND TO TRANSFER OWNERSHIP OF THE PATENTS AND COPYRIGHTS TO THE PURCHASER
FOR THE BENEFIT OF THE PURCHASER.

ARTICLE 6

SPECIAL PROVISIONS CONCERNING STOCK COLLATERAL

Section 6.1                                   Additional Representations.  Each
Debtor has the right to vote the Pledged Securities and there are no
restrictions upon the voting rights associated with, or the transfer of, any of
the Pledged Securities, except as provided by federal and state laws applicable
to the sale of securities generally and the terms of this Agreement.  The
Pledged Securities have been validly issued and, except as described on
Schedule A, are fully paid and non-assessable.  Except as set forth on
Schedule A, there are no outstanding commitments or other obligations of the
issuers of any of the Pledged Securities to issue, and no options, warrants or
other rights of any individual or entity to acquire, any share of any class or
series of capital stock of such issuers.  The Pledged Securities listed and
described on Schedule A attached hereto constitute the percentage of the issued
and outstanding capital stock of each series and class of the issuers thereof as
set forth thereon owned by the relevant Debtor.  Each Debtor agrees that in the
event any such issuer shall issue any additional capital stock of any series or
class (whether or not entitled to vote) to such Debtor or otherwise on account
of its ownership interest therein, subject to the limitations set forth in
Section 2(a) above, such Debtor will forthwith pledge hereunder, or cause to be
pledged hereunder, all such additional shares of such capital stock.

Section 6.2                                   Delivery of Certificates.  Subject
to the rights of a Senior Lender, the certificates for all shares or units of
the Pledged Securities evidenced by a certificate shall be delivered by the
relevant Debtor to the Purchaser duly endorsed in blank for transfer or
accompanied by an appropriate assignment or assignments or an appropriate
undated stock power or powers, in every case sufficient to transfer title
thereto.  Subject to the rights of a Senior Lender, the Purchaser may, at any
time after the occurrence of an Event of Default, cause to be transferred into
its name or into the name of its nominee or nominees any and all of the Pledged
Securities.  The Purchaser shall at all times have the right to exchange the
certificates representing the Pledged Securities for certificates of smaller or
larger denominations.

Section 6.3                                   Remedies.  Unless and until an
Event of Default hereunder has occurred and is continuing and thereafter until
notified by the Purchaser hereof:

(a)                                  Each Debtor shall be entitled to exercise
all voting and/or consensual powers pertaining to the Collateral of such Debtor,
or any part thereof, for all purposes not inconsistent with the terms of this
Agreement or any other document evidencing or otherwise relating to any of the
Obligations.

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(b)                                 Each Debtor shall be entitled to receive and
retain all dividends and distributions in respect of the Collateral which are
paid in cash of whatsoever nature; provided, however, that, if such Debtor does
not have a Senior Lender, such dividends and distributions representing stock or
liquidating dividends or a distribution or return of capital upon or in respect
of the Pledged Securities or any part thereof or resulting from a split-up,
revision or reclassification of the Pledged Securities or any part thereof or
received in addition to, in substitution of or in exchange for the Pledged
Securities or any part thereof as a result of a merger, consolidation or
otherwise, shall be paid, delivered or transferred, as appropriate, directly to
the Purchaser immediately upon the receipt thereof by such Debtor and may, in
the case of cash, be applied by the Purchaser to the Obligations in such order
and manner as the Purchaser shall determine and otherwise in accordance with the
terms of this Agreement, whether or not the same may then be due or otherwise
adequately secured and shall, in the case of all other property, together with
any cash received by the Purchaser and not applied as aforesaid, be held by the
Purchaser pursuant hereto as part of the Collateral pledged under and subject to
the terms of this Agreement.

(c)                                  In order to permit each Debtor to exercise
such voting and/or consensual powers which it is entitled to exercise under
subsection (a) above and to receive such distributions which such Debtor is
entitled to receive and retain under subsection (b) above, the Purchaser will,
if necessary, upon the written request of such Debtor, from time to time execute
and deliver to such Debtor appropriate proxies and dividend orders.

ARTICLE 7

PROVISIONS CONCERNING ALL COLLATERAL

Section 7.1                                   Protection of Purchaser’s
Security.  Each Debtor will at all times keep its Inventory and Equipment
insured in favor of the Purchaser, at such Debtor’s own expense to the extent
and in the manner provided in the Purchase Agreement; all policies or
certificates with respect to such insurance (a) subject to the rights of the
Senior Lender, shall be endorsed to the Purchaser’s commercially reasonable
satisfaction for the benefit of the Purchaser (including, without limitation, by
naming the Purchaser as additional insured and loss payee) and (b) shall state
that such insurance policies shall not be canceled without 30 days’ prior
written notice thereof by the insurer to the Purchaser; and certified copies of
such policies or certificates with respect thereto shall be deposited with the
Purchaser.  If a Debtor shall fail to insure its Inventory and Equipment in
accordance with the preceding sentence, or if Debtor shall fail to so endorse
and deposit all policies or certificates with respect thereto, the Purchaser
shall have the right (but shall be under no obligation), upon prior written
notice to such Debtor, to procure such insurance and each Debtor agrees to
promptly reimburse the Purchaser for all reasonable costs and expenses of
procuring such insurance.  The Purchaser shall, at the time any proceeds of such
insurance are distributed to the Purchaser, apply such proceeds in accordance
with Section 9.4 hereof.  Each Debtor assumes all liability and responsibility
in connection with the Collateral acquired by it and the liability of such
Debtor to pay the Obligations shall in no way be affected

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OR DIMINISHED BY REASON OF THE FACT THAT SUCH COLLATERAL MAY BE LOST, DESTROYED,
STOLEN, DAMAGED OR FOR ANY REASON WHATSOEVER UNAVAILABLE TO SUCH DEBTOR.

Section 7.2                                   Further Actions.  Each Debtor
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to the Purchaser from time to time such lists, descriptions and
designations of its Collateral, warehouse receipts, receipts in the nature of
warehouse receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, conveyances, transfer endorsements, powers
of attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Purchaser deem
reasonably appropriate or advisable to perfect, preserve or protect its security
interest in the Collateral.

Section 7.3                                   Financing Statements; Etc.  Each
Debtor agrees to execute and deliver to the Purchaser such further agreements,
assignments, instruments, and documents, and to do all such other things, as the
Purchaser may reasonably deem necessary or appropriate to assure the Purchaser
its lien and Security Interest hereunder, including, without limitation, (i)
such financing statements or other instruments and documents as the Purchaser
may from time to time reasonably require to comply with the Uniform Commercial
Code and any other applicable law, (ii) such agreements with respect to patents,
trademarks, copyrights, and similar intellectual property rights as the
Purchaser may from time to time reasonably require to comply with the filing
requirements of the United States Patent and Trademark Office and the United
States Copyright Office, and (iii) such control agreements with respect to
Deposit Accounts, Investment Property, Letter of Credit Rights, and electronic
Chattel Paper, and to cause the relevant depository institutions, financial
intermediaries, and issuers to execute and deliver such control agreements, as
the Purchaser may from time to time reasonably require.  Each Debtor hereby
agrees that a carbon, photographic or other reproduction of this Agreement or
any such financing statement is sufficient for filing as a financing statement
by the Purchaser without notice thereof to such Debtor wherever the Purchaser in
its sole discretion desires to file the same.  Each Debtor hereby authorizes the
Purchaser to file any and all financing statements covering the Collateral or
any part thereof as the Purchaser may require, including financing statements
describing the Collateral as “all assets” or “all personal property” or words of
like meaning.  In the event for any reason the law of any jurisdiction other
than California becomes or is applicable to the Collateral or any part thereof,
or to any of the Obligations, each Debtor agrees to execute and deliver all such
agreements, assignments, instruments, and documents and to do all such other
things as the Purchaser reasonably deems necessary or appropriate to preserve,
protect, and enforce the security interest of the Purchaser under the law of
such other jurisdiction.

ARTICLE 8

GUARANTEE

Section 8.1                                   The Guarantee.  To induce the
Purchaser to enter into the Purchase Agreement and in consideration of benefits
expected to accrue to the Company by reason of the Purchase Agreement and for
other good and valuable consideration, receipt of which is hereby

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ACKNOWLEDGED, THE SUBSIDIARY HEREBY UNCONDITIONALLY AND IRREVOCABLY GUARANTEES
JOINTLY AND SEVERALLY TO THE PURCHASER, THE DUE AND PUNCTUAL PAYMENT OF ALL
PRESENT AND FUTURE OBLIGATIONS, IN EACH CASE AS AND WHEN THE SAME SHALL BECOME
DUE AND PAYABLE, WHETHER AT STATED MATURITY, BY ACCELERATION, OR OTHERWISE,
ACCORDING TO THE TERMS HEREOF AND THEREOF (INCLUDING INTEREST WHICH, BUT FOR THE
FILING OF A PETITION IN BANKRUPTCY, WOULD OTHERWISE ACCRUE ON ANY SUCH
INDEBTEDNESS, OBLIGATION, OR LIABILITY).  IN CASE OF FAILURE BY THE COMPANY OR
OTHER OBLIGOR PUNCTUALLY TO PAY ANY OBLIGATIONS GUARANTEED HEREBY, THE
SUBSIDIARY HEREBY UNCONDITIONALLY AGREES TO MAKE SUCH PAYMENT OR TO CAUSE SUCH
PAYMENT TO BE MADE PUNCTUALLY AS AND WHEN THE SAME SHALL BECOME DUE AND PAYABLE,
WHETHER AT STATED MATURITY, BY ACCELERATION, OR OTHERWISE, AND AS IF SUCH
PAYMENT WERE MADE BY THE COMPANY OR SUCH OBLIGOR.

Section 8.2.                                Guarantee Unconditional.  The
obligations of the Subsidiary under this Article 8 shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged, or otherwise affected by:

(a)                                  any extension, renewal, settlement,
compromise, waiver, or release in respect of any obligation of the Company or
other obligor or of any other guarantor under this Agreement or the Purchase
Agreement or by operation of law or otherwise;

(b)                                 any modification or amendment of or
supplement to this Agreement or the Purchase Agreement;

(c)                                  any change in the corporate existence,
structure, or ownership of, or any insolvency, bankruptcy, reorganization, or
other similar proceeding affecting, the Company or other obligor, any other
guarantor, or any of their respective assets, or any resulting release or
discharge of any obligation of the Company or other obligor or of any other
guarantor contained in this Agreement or the Purchase Agreement;

(d)                                 the existence of any claim, set-off, or
other rights which the Company or other obligor or any other guarantor may have
at any time against the Purchaser or any other person or entity, whether or not
arising in connection herewith;

(e)                                  any failure to assert, or any assertion of,
any claim or demand or any exercise of, or failure to exercise, any rights or
remedies against the Company or other obligor, any other guarantor, or any other
person or entity or property;

(f)                                    any application of any sums by whomsoever
paid or howsoever realized to any obligation of the Company or other obligor,
regardless of what obligations of the Company or other obligor remain unpaid;

(g)                                 any invalidity or unenforceability relating
to or against the Company or other obligor or any other guarantor for any reason
of this Agreement or of the Purchase Agreement or any provision of applicable
law or regulation purporting to prohibit the payment by the Company or other
obligor or any other guarantor of the principal of or interest on the Junior
Note or Obligations or any other amount payable under the Purchase Agreement; or

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(h)                                 any other act or omission to act or delay of
any kind by the Purchaser, or any other person or entity or any other
circumstance whatsoever that might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the obligations of the Subsidiary
under this Article 8.

Section 8.3.                                Discharge Only upon Payment in Full;
Reinstatement in Certain Circumstances.  The Subsidiary’s obligations under this
Article 8 shall remain in full force and effect until the Purchase Agreement is
terminated and the principal of and interest on the Junior Note and all other
amounts payable by the Company under the Purchase Agreement and this Agreement
shall have been paid in full.  If at any time any payment of the principal of or
interest on the Junior Note or any Obligation or any other amount payable by the
Company or other obligor or the Subsidiary under the Purchase Agreement or this
Agreement is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy, or reorganization of the Company or other obligor or of
any guarantor, or otherwise, the Subsidiary’s obligations under this Article 8
with respect to such payment shall be reinstated at such time as though such
payment had become due but had not been made at such time.

Section 8.4                                   Subrogation.  The Subsidiary
agrees it will not exercise any rights which it may acquire by way of
subrogation by any payment made hereunder, or otherwise, until all the
Obligations shall have been paid in full subsequent to the termination of all
the Purchase Agreement.  If any amount shall be paid to the Subsidiary on
account of such subrogation rights at any time prior to the later of (x) the
payment in full of the Obligations and all other amounts payable by the Company
hereunder and the Purchase Agreement and (y) the termination of the Purchase
Agreement, such amount shall be held in trust for the benefit of the Purchaser
and shall forthwith be paid to the Purchaser or be credited and applied upon the
Obligations.

Section 8.5                                   Waivers.  The Subsidiary
irrevocably waives acceptance hereof, presentment, demand, protest, and any
notice not provided for herein, together with the rights, protections and
defenses accorded by Sections 2787 through 2855 of the California Civil Code
which provide protections for and limitations on the obligations of a guarantor
such as, but not limited to, limitations that provide (i) in certain
circumstances, that a notice be given to the guarantor of any default by the
debtor or obligor which may result in liability to the guarantor, (ii) that the
obligations of a guarantor cannot be greater in amount or more burdensome than
that of the obligor; (iii) that the guarantor will have the same defenses to
liability as the obligor, other than defenses arising from the personal
disability of the obligor; (iv) that a guarantor will be exonerated from
liability, by any act of the creditor taken without the guarantor’s consent,
which alters the original obligations of the obligor or impairs or suspends any
remedies or rights of the creditor against the obligor or security for the
guaranteed obligation; (v) that the creditor’s acceptance of anything in partial
satisfaction of the guaranteed obligation also reduces the obligation of the
guarantor to the same extent; and (vi) that a guarantor may require the creditor
to proceed against the obligor or security held by the creditor or to pursue
other remedies within the power of the creditor which cannot be pursued by the
guarantor before proceeding against the guarantor, as well as any requirement
that at any time any action be taken by the Purchaser, or any other person or
entity against the Company or other obligor, another guarantor, or any other
person or entity.

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Section 8.6                                   Limit on Recovery. 
Notwithstanding any other provision hereof, the right of recovery against the
Subsidiary under this Article 8 shall not exceed $1.00 less than the lowest
amount which would render such Subsidiary’s obligations under this Article 8
void or voidable under applicable law, including, without limitation, fraudulent
conveyance law.

Section 8.7                                   Stay of Acceleration.  If
acceleration of the time for payment of any amount payable by the Company or
other obligor under this Agreement or the Purchase Agreement, is stayed upon the
insolvency, bankruptcy or reorganization of the Company or such obligor, all
such amounts otherwise subject to acceleration under the terms of this Agreement
or the Purchase Agreement, shall nonetheless be payable by the Subsidiary
hereunder forthwith on demand by the Purchaser.

Section 8.8                                   Benefit to Subsidiary.  The
Company and the Subsidiary are engaged in related businesses and integrated to
such an extent that the financial strength and flexibility of the Company has a
direct impact on the success of the Subsidiary.  The Subsidiary will derive
substantial direct and indirect benefit from the extensions of credit hereunder.

Section 8.9                                   Subsidiary Covenants.  The
Subsidiary shall take such action as the Company is required by the Purchase
Agreement or this Agreement to cause the Subsidiary to take, and shall refrain
from taking such action as the Company is required by the Purchase Agreement or
this Agreement to prohibit the Subsidiary from taking.

ARTICLE 9

REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT

Section 9.1                                   Remedies; Obtaining the Collateral
Upon Default.  Each Debtor agrees that, if an Event of Default shall have
occurred and be continuing, then and in every such case, the Purchaser, in
addition to any rights now or hereafter existing under applicable law, shall
have all rights as a secured creditor under the UCC in all relevant
jurisdictions subject to the subordination thereof pursuant to Section 11.10
hereof, and may:

(a)                                  personally, or by agents or attorneys,
immediately take possession of the Collateral or any part thereof, from the
Debtors or any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon such
Debtor’s premises where any of the Collateral is located and remove the same and
use in connection with such removal any and all services, supplies, aids and
other facilities of such Debtor;

(b)                                 instruct the obligor or obligors on any
agreement, instrument or other obligation (including, without limitation, the
Accounts) constituting the Collateral to make any payment required by the terms
of such agreement, instrument or other obligation directly to the Purchaser;

(c)                                  withdraw all monies, securities and
instruments in the Cash Collateral Account and/or in any other cash collateral
account for application to the Obligations in accordance with Section 9.4
hereof;

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(d)                                 sell, assign or otherwise liquidate any or
all of the Collateral or any part thereof in accordance with Section 9.2 hereof,
or direct such Debtor to sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof, and, in each case, take possession of the
proceeds of any such sale or liquidation;

(e)                                  take possession of the Collateral or any
part thereof, by directing the Debtors in writing to deliver the same to the
Purchaser at any place or places reasonably designated by the Purchaser, in
which event such Debtor shall at its own expense:

(i)                                     forthwith cause the same to be moved to
the place or places so designated by the Purchaser and there delivered to the
Purchaser;

(ii)                                  store and keep any Collateral so delivered
to the Purchaser at such place or places pending further action by the Purchaser
as provided in Section 9.2 hereof; and

(iii)                               while the Collateral shall be so stored and
kept, provide such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good condition; and

(f)                                    license or sublicense, whether on an
exclusive or nonexclusive basis, any Marks, Patents or Copyrights included in
the Collateral for such term and on such conditions and in such manner as the
Purchaser shall in its commercially reasonable judgment determine;

it being understood that each Debtor’s obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Purchaser shall be entitled to a decree
requiring specific performance by each Debtor of said obligation.

Section 9.2                                   Remedies: Disposition of the
Collateral.  Any Collateral repossessed by the Purchaser under or pursuant to
Section 9.1 hereof and any other Collateral whether or not so repossessed by the
Purchaser, may be sold, assigned, leased or otherwise disposed of under one or
more contracts or as an entirety, and without the necessity of gathering at the
place of sale the property to be sold, and in general in such manner, at such
time or times, at such place or places and on such terms as the Purchaser may,
in compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable.  Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Purchaser or after any overhaul or repair at the expense of each Debtor which
the Purchaser shall determine to be commercially reasonable.  Any such
disposition which shall be a private sale or other private proceedings permitted
by such requirements shall be made upon not less than 10 days’ written notice to
each Debtor specifying the time at which such disposition is to be made and the
intended sale price or other consideration therefor, and shall be subject, for
the 10 days after the giving of such notice, to the right of each Debtor or any
nominee of each Debtor to acquire the Collateral involved at a price or for such
other consideration at least equal to the intended sale price or other
consideration so specified, but in no event in an amount greater than

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THE OBLIGATIONS THEN OUTSTANDING AND PROVISION FOR ANY CONTINGENT OBLIGATIONS
REASONABLY ACCEPTABLE TO THE PURCHASER.  ANY SUCH DISPOSITION WHICH SHALL BE A
PUBLIC SALE PERMITTED BY SUCH REQUIREMENTS SHALL BE MADE UPON NOT LESS THAN 10
DAYS’ WRITTEN NOTICE TO EACH DEBTOR SPECIFYING THE TIME AND PLACE OF SUCH SALE
AND, IN THE ABSENCE OF APPLICABLE REQUIREMENTS OF LAW, SHALL BE BY PUBLIC
AUCTION (WHICH MAY, AT THE PURCHASER’S OPTION, BE SUBJECT TO RESERVE), AFTER
PUBLICATION OF NOTICE OF SUCH AUCTION NOT LESS THAN 10 DAYS PRIOR THERETO IN TWO
NEWSPAPERS IN GENERAL CIRCULATION IN ORANGE COUNTY, CALIFORNIA.  TO THE EXTENT
PERMITTED BY ANY SUCH REQUIREMENT OF LAW, THE PURCHASER MAY BID FOR AND BECOME
THE PURCHASER OF THE COLLATERAL OR ANY ITEM THEREOF, OFFERED FOR SALE IN
ACCORDANCE WITH THIS SECTION WITHOUT ACCOUNTABILITY TO THE DEBTORS.  IF, UNDER
MANDATORY REQUIREMENTS OF APPLICABLE LAW, THE PURCHASER SHALL BE REQUIRED TO
MAKE DISPOSITION OF THE COLLATERAL WITHIN A PERIOD OF TIME WHICH DOES NOT PERMIT
THE GIVING OF NOTICE TO THE DEBTORS AS HEREINABOVE SPECIFIED, THE PURCHASER NEED
GIVE THE DEBTORS ONLY SUCH NOTICE OF DISPOSITION AS SHALL BE REASONABLY
PRACTICABLE IN VIEW OF SUCH MANDATORY REQUIREMENTS OF APPLICABLE LAW.

Section 9.3                                   Waiver of Claims.  Except as
otherwise provided in this Agreement or prohibited by applicable law, (a) THE
DEBTORS HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND
JUDICIAL HEARING IN CONNECTION WITH THE PURCHASER’S TAKING POSSESSION OR THE
PURCHASER’S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION,
ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND
ANY SUCH RIGHT WHICH SUCH DEBTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR
ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, (b) the Debtors hereby further
waive, to the extent permitted by law:

(i)                                     all damages occasioned by such taking of
possession except any damages which are determined by a final, non-appealable
court order to have been caused by the Purchaser’s gross negligence or willful
misconduct; and

(ii)                                  all other requirements as to the time,
place and terms of sale or other requirements with respect to the enforcement of
the Purchaser’s rights hereunder; and

(iii)                               all rights of redemption, appraisement,
valuation, stay, extension or moratorium now or hereafter in force under any
applicable law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof, and each Debtor, for
itself and all who may claim under it, insofar as it or they now or hereafter
lawfully may, hereby waives the benefit of all such laws.

Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Debtors therein and thereto, and
shall be a perpetual bar both at law and in equity against the Debtors and
against any and all persons or entities claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under the Debtors.

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Section 9.4                                   Application of Proceeds.

(a)                                  All monies collected by the Purchaser upon
any sale or other disposition of the Collateral, together with all other moneys
received by the Purchaser hereunder, shall be applied to the payment of the
Obligations.

(b)                                 It is understood and agreed that each Debtor
shall remain liable to the extent of any deficiency between the amount of the
proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.

Section 9.5                                   Remedies Cumulative.  Each and
every right, power and remedy hereby specifically given to the Purchaser shall
be in addition to every other right, power and remedy specifically given under
this Agreement, the Purchase Agreement or now or hereafter existing at law, in
equity or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time or simultaneously and as often and in such order as may be deemed expedient
by the Purchaser.  All such rights, powers and remedies shall be cumulative and
the exercise or the beginning of the exercise of one shall not be deemed a
waiver of the right to exercise any other or others.  No delay or omission of
the Purchaser in the exercise of any such right, power or remedy and no renewal
or extension of any of the Obligations shall impair any such right, power or
remedy or shall be construed to be a waiver of any Default or Event of Default
or an acquiescence therein.  No notice to or demand on the Debtors in any case
shall entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Purchaser to
any other or further action in any circumstances without notice or demand.  In
the event that the Purchaser shall bring any suit to enforce any of its rights
hereunder and shall be entitled to judgment, then in such suit the Purchaser may
recover reasonable expenses, including reasonable attorneys’ fees, and the
amounts thereof shall be included in such judgment.

Section 9.6                                   Discontinuance of Proceedings.  In
case the Purchaser shall have instituted any proceeding to enforce any right,
power or remedy under this Agreement by foreclosure, sale, entry or otherwise,
and such proceeding shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Purchaser, then and in every such
case the Debtors, the Purchaser and each holder of any of the Obligations shall
be restored to their former positions and rights hereunder with respect to the
Collateral subject to the Security Interest created under this Agreement, and
all rights, remedies and powers of the Purchaser shall continue as if no such
proceeding had been instituted.

Section 9.7                                   Attorney-in-Fact.  Without
limiting any rights or powers granted by this Agreement to the Purchaser while
no Event of Default has occurred and is continuing, upon the occurrence and
during the continuance of any Event of Default the Purchaser is hereby appointed
the attorney-in-fact of the Debtors for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instruments
which may be reasonably required to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an interest. 
Without limiting the generality of the foregoing, the Purchaser shall have the
right and power to receive, endorse and collect all checks made payable to the

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ORDER OF THE DEBTORS REPRESENTING ANY DIVIDEND, PAYMENT OR OTHER DISTRIBUTION IN
RESPECT OF THE COLLATERAL OR ANY PART THEREOF AND TO GIVE FULL DISCHARGE FOR THE
SAME.

ARTICLE 10

DEFINITIONS

Capitalized terms used in this Agreement without definition have the respective
meanings ascribed to such terms in the Purchase Agreement. All other capitalized
terms contained in this Agreement, unless the context indicates otherwise, have
the meanings provided for by the Uniform Commercial Code as in effect in the
State of California to the extent the same are used or defined therein.  In
addition, the following terms shall have the meanings herein specified.  Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.

“Agreement” shall mean this Security Agreement as the same may be modified,
supplemented or amended from time to time in accordance with its terms.

“Cash Collateral Account” shall mean a non-interest bearing cash collateral
account maintained with, and in the sole dominion and control of, the Purchaser
for the benefit of the Purchaser.

“Copyrights” shall mean any United States copyright owned (or subject to the
rights of ownership) by each Debtor, including any registrations of any
copyright, in the United States Copyright Office, as well as any application for
a copyright registration now or hereafter made with the United States Copyright
Office by such Debtor.

“Default” shall mean any event which, with notice or lapse of time, or both,
would constitute an Event of Default.

“Event of Default” shall mean any Event of Default under, and as defined in, the
Purchase Agreement and shall in any event, without limitation, include any
payment default on any of the Obligations after the expiration of any applicable
grace period.

“Junior Note” shall mean that certain Junior Secured Convertible Promissory Note
in the initial principal amount of $5,000,000, dated as of the date hereof,
issued by the Company to the Purchaser.

“Liens” shall have the meaning set forth in Section 2.2 hereof.

“Marks” shall mean any United States trademarks, service marks and trade names
now owned, subject to a right of ownership or hereafter acquired by each Debtor,
including any registration of, or application for, any trademarks and service
marks in the United States Patent and Trademark Office, and any trade dress
including logos and/or designs used by either of the Debtors in the United
States.

“Obligations” shall mean (a) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of all obligations and
liabilities of the Debtors now

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EXISTING OR HEREAFTER INCURRED UNDER, ARISING OUT OF OR IN CONNECTION WITH THE
PURCHASE AGREEMENT AS SUCH RELATES TO THE JUNIOR NOTE AND THE DUE PERFORMANCE
AND COMPLIANCE BY THE DEBTORS WITH THE TERMS OF THE PURCHASE AGREEMENT AS SUCH
RELATES TO THE JUNIOR NOTE; (B) ANY AND ALL SUMS ADVANCED BY THE PURCHASER IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT OR THE PURCHASE AGREEMENT IN ORDER
TO PRESERVE THE COLLATERAL OR PRESERVE THEIR SECURITY INTEREST IN THE
COLLATERAL; (C) IN THE EVENT OF ANY PROCEEDING FOR THE COLLECTION OR ENFORCEMENT
OF ANY OBLIGATIONS OR LIABILITIES REFERRED TO IN CLAUSE (A), AFTER AN EVENT OF
DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, THE REASONABLE EXPENSES OF
RE-TAKING, HOLDING, PREPARING FOR SALE OR LEASE, SELLING OR OTHERWISE DISPOSING
OF OR REALIZING ON THE COLLATERAL, OR OF ANY EXERCISE BY THE PURCHASER OF ITS
RIGHTS HEREUNDER, TOGETHER WITH REASONABLE ATTORNEYS’ FEES AND COURT COSTS; AND
(D) ALL AMOUNTS PAID BY ANY INDEMNITEE AS TO WHICH SUCH INDEMNITEE HAS THE RIGHT
TO REIMBURSEMENT UNDER THIS AGREEMENT.

“Patents” shall mean any United States patent owned, subject to a right of
ownership by or hereafter acquired by the Debtors and any divisions,
continuations, reissues, reexaminations, extensions or renewals thereof, as well
as any application for a United States patent now or hereafter made by either of
the Debtors or subject to a right of ownership in such Debtor.

“Permitted Liens” shall mean any Liens set forth on Schedule I hereto.

“Proceeds” shall have the meaning provided in the Uniform Commercial Code as in
effect in the State of California on the date hereof or under other relevant law
and, in any event, shall include, but not be limited to, (a) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to the
Purchaser or the Debtors from time to time with respect to any of the
Collateral, (b) any and all payments (in any form whatsoever) made or due and
payable to the Debtors from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any person acting under color of
governmental authority) and (c) any and all other amounts from time to time paid
or payable under or in connection with any of the Collateral.

“Proprietary Information” means all information and know-how worldwide,
including, without limitation, technical data, manufacturing data, research and
development data, manufacturing data, research and development data, data
relating to compositions, processes and formulations, manufacturing and
production know-how and experience, management know-how, training programs,
manufacturing, engineering and other drawings, specifications, performance
criteria, operating instructions, maintenance manuals, technology, technical
information, software, engineering and computer data and databases, design and
engineering specifications, catalogs, promotional literature and financial,
business and marketing plans, inventions and invention disclosures.

“Senior Lender” shall have the meaning provided in Section 1.1 of this
Agreement.

“Senior Security Agreement” shall have the meaning provided in Section 1.1 of
this Agreement.

“Termination Date” shall have the meaning provided in Section 11.8 of this
Agreement.

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“Trade Secrets” means any secretly held existing engineering and other data,
information, production procedures and other know-how relating to the design,
manufacture, assembly, installation, use, operation, marketing, sale and
servicing of any products or business of the Debtors worldwide whether written
or not written.

ARTICLE 11

MISCELLANEOUS

Section 11.1                            Notices.  Except as otherwise specified
herein, all notices, requests, demands or other communications to or upon the
respective parties hereto shall be deemed to have been duly given or made when
personally delivered to the party to which such notice, request, demand or other
communication is required or permitted to be given or made under this Agreement,
addressed as follows:

(a)                                  if to the Debtors:

DynTek, Inc.

19700 Fairchild Road, Suite 230

Irvine, California 92612

Attention: Chief Financial Officer

with a copy to,

Stradling Yocca Carlson & Rauth

660 Newport Center Drive, Suite 1600

Newport Beach, California 92660

Attention: Christopher D. Ivey, Esq.

(b)                                 if to Purchaser, at such address as the
Purchaser shall have specified in the Purchase Agreement, with a copy to:

Paul N. Silverstein, Esq.

Andrews Kurth LLP

450 Lexington Avenue

New York, NY 10017

Fax:  (212) 850-2929

Tel:  (212) 850-2800

or at such other address as shall have been furnished in writing by any person
or entity described above to the party required to give notice hereunder.

Section 11.2                            Waiver; Amendment.  None of the terms
and conditions of this Agreement may be changed, waived, modified or varied in
any manner whatsoever unless in writing duly signed by each Debtor and the
holder of the Junior Note.

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Section 11.3                            Obligations Absolute.  The obligations
of the Debtors hereunder shall remain in full force and effect without regard
to, and shall not be impaired by, (a) any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or the like
of the Debtors except as required by applicable law; (b) any exercise or
non-exercise of any right, remedy, power or privilege under or in respect of
this Agreement, the Purchase Agreement, the Junior Note issued thereunder or any
waiver of any right, remedy, power or privilege under any other agreement; or
(c) any amendment to or modification of this Agreement, the Purchase Agreement,
the Junior Note issued thereunder or any security for any of the Obligations,
other than amendments or modifications of this Agreement.

Section 11.4                            Successors and Assigns.  This Agreement
shall be binding upon the Debtors and their successors and assigns and shall
inure to the benefit of the Purchaser and its respective successors and
assigns.  All agreements, statements, representations and warranties made by the
Debtors herein or in any certificate or other instrument delivered by the
Debtors or on its behalf under this Agreement shall be considered to have been
relied upon by the Purchaser and shall survive the execution and delivery of
this Agreement, the Purchase Agreement or the Junior Note issued thereunder
regardless of any investigation made by the Purchaser or on its behalf.

Section 11.5                            Headings Descriptive.  The headings of
the several sections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.

Section 11.6                            Governing Law.  THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA WITHOUT REGARD FOR
CONFLICTS OF LAWS OF CHOICE OF LAWS PRINCIPLES.

Section 11.7                            Debtors’ Duties.  It is expressly
agreed, anything herein contained to the contrary notwithstanding, that the
Debtors shall remain liable to perform all of the obligations, if any, assumed
by it with respect to the Collateral and the Purchaser shall not have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Purchaser be required or obligated
in any manner to perform or fulfill any of the obligations of the Debtors under
or with respect to any Collateral.

Section 11.8                            Termination; Release.  After the
Termination Date, this Agreement shall terminate (provided that all indemnities
set forth in the Purchase Agreement shall survive such termination) and the
Purchaser, at the request and expense of the Debtors, will promptly execute and
deliver to the Debtors a proper instrument or instruments (including Uniform
Commercial Code termination statements on form UCC-3) acknowledging the
satisfaction and termination of this Agreement, and will duly assign, transfer
and deliver to the Debtors (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Purchaser
and has not theretofore been sold or otherwise applied or released pursuant to
this Agreement.  As used in this Agreement, “Termination Date” shall mean the
date upon which all

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Obligations then due and payable have been paid in full in cash, all commitments
with respect thereto have terminated and no Junior Note is outstanding.

Section 11.9                            Counterparts.  This Agreement may be
executed in any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.  A set of counterparts executed by all the parties hereto shall be
lodged with the Debtors and the Purchaser.

Section 11.10                     Subordination.  The Security Interest granted
pursuant to this Agreement and Purchaser’s rights and remedies under this
Agreement are subordinate to the rights and remedies of and the security
interest granted to the Senior Lenders under the Senior Security Agreement. 
Upon the disposition and application of the Collateral under (and as defined in)
the Senior Security Agreement the subordination of the liens and security
interests set forth in this Agreement shall terminate and the Obligations
described herein and all rights and remedies of the Purchaser’s described herein
shall rank pari passu in all respects with those set forth in the Senior
Security Agreement.

[Remainder of page left intentionally blank.]

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IN WITNESS WHEREOF, the parties hereto have caused this Security and Pledge
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.

DEBTORS:

 

 

 

DYNTEK, INC.

 

 

 

 

 

By:

/s/ Casper W. Zublin, Jr.

 

 

Name: Casper W. Zublin, Jr.

 

Title: Chief Executive Officer

 

 

 

DYNTEK SERVICES, INC.

 

 

 

 

 

By:

/s/ Casper W. Zublin, Jr.

 

 

Name: Casper W. Zublin, Jr.

 

Title: Chief Executive Officer

 

 

 

PURCHASER:

 

 

 

TRUST A-4 - LLOYD I. MILLER

 

 

 

By: PNC Bank, National Association,

 

as Trustee

 

 

 

 

 

By:

/s/ Lloyd I. Miller, III

 

 

Name: Lloyd I. Miller, III

 

Title: Investment Advisor to Trustee

 

 

Address:

4550 Gordon Drive

 

Naples, FL 34102-7914

 

Fax: (239) 263-8860

 

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