**EXHIBIT 10.1**

 

**NOTE PURCHASE AGREEMENT**

 

**between**

 

**DYNTEK, INC.**

 

**and**

 

**THE PURCHASERS NAMED IN SCHEDULE I**

 

**Dated as of March 8, 2006**

 

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**INDEX TOSCHEDULES**

 
| SCHEDULE I   |   | Schedule of Purchasers |
|-------------------|--------|-----------------------------|
| SCHEDULE II  |   | Trade Creditors             |
| SCHEDULE III |   | Note Holders                |
| SCHEDULE IV  |   | Disclosure Schedules        |
| SCHEDULE V   |   | Use of Proceeds             |

 

**INDEX TOEXHIBITS**

 
| EXHIBIT A |   | Form of  Senior Note                                  |
|----------------|--------|------------------------------------------------------------|
| EXHIBIT B |   | Form of  Settlement and Release Agreement             |
| EXHIBIT C |   | Form of  Conversion and Settlement Agreement          |
| EXHIBIT D |   | Form of  Warrant                                      |
| EXHIBIT E |   | Form of  Security and Pledge Agreement (Senior Notes) |
| EXHIBIT F |   | Form of  Junior Note                                  |
| EXHIBIT G |   | Form of  Security and Pledge Agreement (Junior Notes) |

 

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**THIS NOTE PURCHASE AGREEMENT**(the “Agreement”) is dated as of March 8,2006, between DynTek, Inc., a Delaware corporation (the “Company”), andthe purchasers named in the attached Schedule I (each individuallya “Purchaser” and collectively the “Purchasers”).

 

**WHEREAS**, the Company wishes to issue and sell to thePurchasers up to an aggregate of $6,700,000 in principal amount of its seniorsecured promissory notes; and

 

**WHEREAS,**the Company wishes to issue and sell to aPurchaser up to an aggregate of $3,000,000 in principal amount of a juniorsecured promissory note; and

 

**WHEREAS**, the Purchasers, severally, wish to purchasethe notes on the terms and subject to the conditions set forth in thisAgreement.

 

**NOW, THEREFORE**, in consideration of the premises and themutual covenants contained in this Agreement, the parties agree as follows:

 

# **ARTICLE I**

# ** **

# **PURCHASE AND SALE OF NOTES AND TERMS OF NOTES**

# ** **

## **SECTION 1.01.****                                  ****TheSenior Notes**. The Company has authorized the issuance and saleto the Purchasers, in the respective amounts set forth in the Schedule ofPurchasers attached hereto in Schedule I, of the Company’s Senior SecuredPromissory Notes, due March 1, 2010 (the “Senior Note Maturity Date”), inthe original aggregate principal amount of up to $6,700,000. The Senior Noteswill be substantially in the form set forth in Exhibit Ahereto and are herein referred to individually as a “Senior Note” andcollectively as the “Senior Notes,” which terms will also include any notesdelivered in exchange or replacement therefor.

##  

## **SECTION 1.02.****                                  ****TheJunior Note****.**The Company has authorizedthe issuance and sale to the Purchaser, set forth in the Schedule ofPurchasers attached hereto in Schedule I, of the Company’s JuniorSecured Convertible Promissory Note (the “Junior Note”, and collectively withthe Senior Notes referred to as the “Notes,” which term will also include anynotes delivered in exchange or replacement therefor), due March 1, 2011(the “Junior Note Maturity Date”), in the original aggregate principal amountof up to $3,000,000. The Junior Note will be substantially in the form setforth in Exhibit F hereto.

##  

## **SECTION 1.03.****                                  ****Purchaseand Sale of Notes**. The Company agrees to issue and sell to thePurchasers, and, subject to and in reliance upon the representations,warranties, terms and conditions of this Agreement, the Purchasers, severallyand not jointly, agree to purchase, the Notes set forth opposite theirrespective names in the Schedule of Purchasers attached as Schedule Ifor the aggregate purchase price set forth therein. The consideration to bepaid for the Notes will consist of $9,700,000 cash. The closing of suchpurchase and sale (the “Closing”) will be held at the office of Paul, Hastings,Janofsky & Walker LLP, 695 Town Center Drive, Costa Mesa, CA 92626, onMarch 8, 2006 (the “ClosingDate”) at 10:00 A.M., Pacific Standard Time, or on such other date and atsuch time as may be mutually agreed upon. At the Closing, the Company willissue and deliver to each Purchaser one Senior Note or one Junior Note, as thecase may be, payable to the order of such Purchaser, in the principalamount set forth opposite such Purchaser’s name in the Schedule ofPurchasers attached as Schedule I against delivery to the Companyof a check payable to the order of the Company, in the amount set forthopposite the name of such Purchaser under the heading “Aggregate Purchase Pricefor Notes” on Schedule I, less the Purchaser’s reasonable estimatedexpenses to be paid by the Company pursuant to Section 7.01, transferenceof such sum to the account of the Company by wire transfer, or delivery ortransference of such sum to the Company by any combination of such methods ofpayment.

 

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## **SECTION 1.04.****                                  ****Paymentsand Endorsements**. Payments of principal and interest on the Noteswill be made directly by check duly mailed or delivered to the Purchasers attheir addresses referred to in the Schedule of Purchasers attached as Schedule Ior made to the account of the Purchaser by wire transfer referred to in the Schedule ofPurchasers attached as Schedule I or indicated in any noticedelivered by a Purchaser to the Company, without any presentment or notation ofpayment, except that prior to any transfer of any Note, the holder of recordwill endorse on such Note a record of the date to which interest has been paidand all payments made on account of principal of such Note.

##  

## **SECTION 1.05.****                                  ****InterestRate for Senior Note; Payment of Principal and Interest for Senior Note**. The SeniorNotes will accrue interest at the rate of 8% per annum if paid in cash or 11%per annum if paid in kind. The Company in its sole discretion may elect topay in cash or in kind until March 31, 2009, after which interest will bepaid in cash. Interest will be due and payable quarterly in arrears on the lastday of each fiscal quarter (each, a “Senior Note Interest Payment Date”), withthe first interest payment due June 30, 2006. If the Company chooses tomake interest payments in kind, the amount of accrued interest to be so paidwill be added to the principal amount of the Senior Notes on the applicable SeniorNote Interest Payment Date. Principal will be amortized over three years andpayable in equal monthly installments on the last day of each month beginningon March 31, 2009. The Senior Notes and all accrued but unpaid interestthereon shall be due and payable in full at the Senior Note Maturity Dateunless earlier redeemed pursuant to the terms and conditions set forth in Section 1.06herein.

##  

## **SECTION 1.06.****                                  ****Prepaymentof Senior Notes**. The Senior Notes will be payable by the Companyprior to the Senior Note Maturity Date as follows (all prepayments made by theCompany to the Senior Note holders under this Agreement shall be made by wiretransfer of immediately available funds in the lawful currency of the UnitedStates without setoff or withholding of any kind):

##  

### **(a)****                                 **Voluntary Prepayment by the Company. At any time until the Senior Notes havebeen repaid in full, the Company may, at its sole option, redeem the entireoutstanding principal amount of the Senior Notes (including any and all accruedbut unpaid interest on such principal amount) through the date of repayment onsuch principal amount (such entire outstanding principal amount, plus all suchaccrued but unpaid interest, hereinafter referred to for purposes of this Section 1.06as the “Redemption Amount”) by paying to the holders of the Senior Notes105% of the Redemption Amount, with such payments to be apportioned ratablyamong the Purchasers or their transferees according to the unpaid principalbalance and accrued but unpaid interest thereon to which such payments relate.

###  

### **(b)****                                 **Prepayment on Change of Control. At any time until the Senior Notes havebeen repaid in full, the Company will redeem the Senior Notes in their entiretyupon the occurrence of a Change of Control by paying to the holders of the SeniorNotes 105% of the Redemption Amount on the closing date of the Change ofControl. Such payments will be apportioned ratably among the Senior Noteholders according to the unpaid principal balance and accrued but unpaidinterest thereon to which such payments relate. For purposes of this Section 1.06(b),“Change of Control” means the event of (i) a merger, consolidation,recapitalization or share exchange in which the holders of the voting stock ofthe Company immediately prior to such merger, consolidation, recapitalizationor share exchange will not own 50% or more of the voting stock of thecontinuing or surviving corporation or other entity, or the parent company ofsuch corporation or other entity, immediately after such merger, consolidation,recapitalization or share exchange, (ii) the sale, assignment, conveyance,transfer, lease or other disposition (other than the grant of a securityinterest) of all or substantially all of the assets of Company to any person orgroup of related persons, or (iii) any sale or other disposition of thevoting stock of the Company representing 50% or more of the total voting powerof the Company’s outstanding capital stock in a single transaction or a series ofrelated transactions to any person, or group of related persons; *provided, however* that none of thefollowing events shall be deemed to be a Change of Control for

 

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### purposes of this Agreement: (A) the Company’sissuance of shares of its Common Stock, $0.0001 par value (the “Common Stock”)to any of its existing unsecured trade creditors set forth on Schedule IIwhich opt to convert trade debt (as of the date of this Agreement) up tothe amount set forth on Schedule II into Common Stock at aconversion rate of $0.02 per share within three business days of the dateimmediately following the effective date of the Reverse Stock Split (as definedbelow in Section 1.15(g)), or June 30, 2006, whichever is earlier, pursuantto a Settlement and Release Agreement substantially in the form set forthas Exhibit B; and (B) the Company’s issuance of Common Stock withinthe earlier of (i) three business days of the effective date of theReverse Stock Split, or (ii) June 30, 2006, pursuant to a conversionand settlement agreement, substantially in the form of Exhibit Chereto (a “Conversion and Settlement Agreement”), with each and all ofthe holders (all of such holders are set forth on Schedule III) of theCompany’s:  (a) 9% SeniorSubordinated Convertible Notes dated as of October 15, 2004 (the “9%Notes”), (b) Amended and Restated 9% Senior Subordinated ConvertibleNotes dated as of October 26, 2005 (the “Amended 9% Notes”), (c) SecuredPromissory Notes dated as of October 26, 2005 (the “Bridge Notes”), and (d) SecuredPromissory Notes dated as of September 20, 2005 issued to the former shareholdersof Integration Technologies, Inc. (the “Acquisition Notes” andtogether with the 9% Notes, the Amended 9% Notes and the Bridge Notes, the “OutstandingNotes”).

###  

### **(c)****                                 **Prepayment on Sale of Assets. At any time until the Senior Notes havebeen repaid in full, the Company will redeem all or a portion of the RedemptionAmount immediately upon the occurrence of a Substantial Asset Sale as follows:  Upon the occurrence of a Substantial AssetSale, (i) 50% of the gross proceeds of such sale (the “Asset Sale PrepaymentAmount”) will be paid to the Purchasers or subsequent transferees of the SeniorNotes in respect of the Redemption Amount; and (ii) a prepaymentpenalty equal to 2% of the Asset Sale Prepayment Amount will be paid by theCompany to the Purchasers or subsequent transferees of the Senior Notes. Suchpayments will be apportioned ratably among the Senior Note holders according tothe unpaid principal balance and accrued but unpaid interest thereon to whichsuch payments relate. For purposes of this Section 1.06(c), a “SubstantialAsset Sale” is any voluntary or involuntary sale or series of sales of theCompany’s assets (including casualty losses or condemnations)  which generate(s) (i)  gross proceeds of$100,000 or more in the case of a single-asset sale, or (ii) aggregategross proceeds of $100,000 or more over any 12-month period in the case of a series ofasset sales.

###  

## **SECTION 1.07.****                                  ****Warrantsfor Senior Notes**. At the Closing, the Company will issue to thePurchasers of Senior Notes *pro rata*,according to each Purchaser’s proportion of the aggregate principal amount ofthe Senior Notes, warrants for the purchase of an aggregate of 19.9% of theCommon Stock of the Company, exercisable at $0.001 per share, in the form setforth as Exhibit D.

##  

## **SECTION 1.08.****                                  ****InterestRate for Junior Note; Payment of Principal and Interest for Junior Note**. The JuniorNote will accrue interest at the rate of ten percent (10%) per annum,compounding quarterly. The said interest shall become due quarterly in arrearsand shall be payable on the last day of each fiscal quarter (each, an “InterestPayment Date”) in respect of the immediately preceding completed fiscal quarter.The first Interest Payment Date will be June 30, 2006. At the Company’ssole option, all interest payments due and payable through June 30, 2009 may bepaid in kind at the rate of fourteen percent (14%) per annum, compoundingquarterly, in which case the accrued interest will be added to the principalamount of the Junior Note on the applicable Interest Payment Date, and interestwill accrue on the aggregate principal amount. All interest payments due andpayable after June 30, 2009 must be paid in cash. The Junior Note shall bedue and payable in full at the Junior Note Maturity Date unless earlierconverted in accordance with Section 3 of the Junior Note.

##  

## **SECTION 1.09.****                                  ****Redemptionof Junior Note**. Until March 1, 2010, the Company may notprepay the Junior Note in whole or in part without the prior writtenconsent of the holder thereto, which may be given or withheld in suchholder’s sole discretion. At anytime from March 1, 2010 until the

 

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## Junior Note Maturity Date,the Company may prepay this Junior Note in whole or in part at anytime without penalty.

##  

## **SECTION 1.10.****                                  ****Conversionof Junior Note**. All or any part of the principal plus accruedbut unpaid interest on the Junior Note may be converted at any time into anumber of fully paid and nonassessable shares of Common Stock of the Company,at the sole option of the holder of the Junior Note, pursuant to the terms andconditions of conversion set forth in the Junior Note.

##  

## **SECTION 1.11.****                                  ****Paymenton Non-Business Days**. Whenever any payment to be made will be dueon a Saturday, Sunday or a public holiday under the laws of the State ofCalifornia, such payment may be made on the next succeeding business day,and such extension of time will in such case be included in the computation ofpayment of interest due.

##  

## **SECTION 1.12.****                                  ****Registrationof Notes**. The Company will maintain at its principal officea register of the Notes and will record therein the names and addresses of theregistered holders of the Notes, the address to which notices are to be sentand the address to which payments are to be made as designated by the registeredholder if other than the address of the holder, and the particulars of alltransfers, exchanges and replacements of Notes. No transfer of a Note will bevalid unless made on such register for the registered holder or his executorsor administrators or his or their duly appointed attorney, upon surrendertherefor for exchange as hereinafter provided, accompanied by an instrument inwriting, in form and execution reasonably satisfactory to the Company. EachNote issued hereunder, whether originally or upon transfer, exchange orreplacement of a Note or Notes, will be registered on the date of executionthereof by the Company and will be dated the date to which interest has beenpaid on such Notes or Note. The registered holder of a Note will be that personin whose name the Note has been so registered by the Company. A registeredholder will be deemed the owner of a Note for all purposes of this Agreementand, subject to the provisions hereof, will be entitled to the principal andinterest evidenced by such Note free from all equities or rights of setoff orcounterclaim between the Company and the transferor of such registered holderor any previous registered holder of such Note.

##  

## **SECTION 1.13.****                                  ****Transferand Exchange of Notes**. The registered holder of any Note or Notesmay, prior to maturity or prepayment thereof, surrender such Note or Notes atthe principal office of the Company for transfer or exchange; *provided, however*, the registered holder of any Note orNotes will not transfer any such Note (a) to any person or entity which isnot an “accredited investor” within the meaning of Rule 501 under theSecurities Act of 1933, as amended (the “Securities Act”), (b) to anyperson or entity that could result in the loss of the exemption fromregistration under the Securities Act applicable to the original sale of theNotes, as determined in the reasonable discretion of the Company pursuant to awritten opinion of the Company’s counsel, and (c) so long as no Event ofDefault has occurred, without the consent of the Company, which consent willnot be unreasonably withheld. Within a reasonable time after notice to theCompany from a registered holder of its intention to make such exchange andwithout expense (other than transfer taxes, if any) to such registered holder,subject to the Company’s consent, if such consent is required by this Section 1.13,the Company will issue in exchange therefor another Note or Notes, in suchdenominations as requested by the registered holder, for the same aggregateprincipal amount as the unpaid principal amount of the Note or Notes sosurrendered and having the same maturity and rate of interest, containing thesame provisions and subject to the same terms and conditions as the Note orNotes so surrendered. Each new Note will be made payable to such person orpersons, or registered assigns, as the registered holder of such surrenderedNote or Notes may designate, and such transfer or exchange will be made insuch a manner that no gain or loss of principal or interest will resulttherefrom.

##  

## **SECTION 1.14.****                                  ****Replacementof Notes**. Upon receipt of evidence satisfactory to theCompany of the loss, theft, destruction or mutilation of any Note and, ifrequested in the case of any such

 

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## loss, theft or destruction,upon delivery of an indemnity bond or other agreement or security reasonablysatisfactory to the Company, or, in the case of any such mutilation, uponsurrender and cancellation of such Note, the Company will issue a new Note, oflike tenor and amount and dated the date to which interest has been paid, inlieu of such lost, stolen, destroyed or mutilated Note; provided, however,if any Note of which a Purchaser whose name is set forth in the Schedule ofPurchasers attached as Schedule I, its nominee, or any of itspartners is the registered holder is lost, stolen or destroyed, the affidavitof the President, Treasurer or any Assistant Treasurer or any other authorizedrepresentative of the registered holder setting forth the circumstances withrespect to such loss, theft or destruction will be accepted as satisfactoryevidence thereof, and no indemnification bond or other security will berequired as a condition to the execution and delivery by the Company of a newNote in replacement of such lost, stolen or destroyed Note other than theregistered holder’s written agreement to indemnify the Company.

##  

## **SECTION 1.15.****                                  ****Eventsof Default**. If any of the following events (“Events of Default”)shall occur and be continuing:

##  

### **(a)****                                 **The Company will fail to pay any installmentof principal of, or interest due on, any of the Notes within five (5) calendardays of the date such installment is due;

###  

### **(b)****                                 **Any material representation or warranty madeby the Company in this Agreement or the Security and Pledge Agreements (ashereinafter defined), or by the Company (or any officers of the Company) in anycertificate, instrument or written statement contemplated by or made ordelivered pursuant to or in connection with this Agreement or the Security andPledge Agreements will prove to have been incorrect when made in any materialrespect;

###  

### **(c)****                                 **The Company will fail to perform orobserve any other material term, covenant or agreement contained in thisAgreement, the Security and Pledge Agreements, the Notes or any agreementexecuted and delivered by the Company in connection with this Agreement or theSecurity and Pledge Agreements on its part to be performed or observed andany such failure remains unremedied for ten (10) business days afterwritten notice thereof will have been given to the Company by any registeredholder of the Notes;

###  

### **(d)****                                 **The Company will fail to pay any indebtednessin excess of an aggregate of $100,000 for borrowed money (other than asevidenced by the Notes) owing by the Company, or any interest or premiumthereon, when due (or, if permitted by the terms of the relevant document,within any applicable grace period), whether such indebtedness will become dueby scheduled maturity, by required prepayment, by acceleration, by demand or otherwise,or will fail to perform any term, covenant or agreement on its part tobe performed under any agreement or instrument evidencing or securing orrelating to any indebtedness in excess of an aggregate of $100,000 owing by theCompany when required to be performed (or, if permitted by the terms of therelevant document, within any applicable grace period), if the effect of suchfailure to pay or perform is to accelerate, or to permit the holder orholders of such indebtedness, or the trustee or trustees under any suchagreement or instrument to accelerate, the maturity of such indebtedness,unless such failure to pay or perform will be waived by the holder orholders of such indebtedness or such trustee or trustees;

###  

### **(e)****                                 **The Company will be involved in financialdifficulties as evidenced (i) by its admitting in writing its inability topay its debts generally as they become due; (ii) by its commencement of avoluntary case under Title 11 of the United States Code as from time to time ineffect, or by its authorizing, by appropriate proceedings of its Board ofDirectors or other governing body, the commencement of such a voluntary casewhich is not dismissed within sixty (60) days; (iii) by its filing ananswer or other pleading admitting or failing to deny the material allegationsof a petition filed against it commencing an involuntary case under said Title11, or seeking, consenting to or acquiescing in the

 

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### relief therein provided, or by its failing tocontrovert timely the material allegations of any such petition; (iv) bythe entry of an order for relief in any involuntary case commenced under saidTitle 11; (v) by its seeking relief as a debtor under any applicable law,other than said Title 11, of any jurisdiction relating to the liquidation orreorganization of debtors or to the modification or alteration of the rights ofcreditors, or by its consenting to or acquiescing in such relief; (vi) bythe entry of an order by a court of competent jurisdiction (a) finding itto be bankrupt or insolvent, (b) ordering or approving its liquidation,reorganization or any modification or alteration of the rights of itscreditors, or (c) assuming custody of, or appointing a receiver or othercustodian for, all or a substantial part of its property; or (vii) byits making an assignment for the benefit of, or entering into a compositionwith, its creditors, or appointing or consenting to the appointment of areceiver or other custodian for all or a substantial part of its property;

###  

### **(f)****                                   **The Company shall fail to perform any ofits obligations under Section 5.21, Section 5.22, Section 5.23or Article VI of this Agreement;

###  

### **(g)****                                **The Company shall fail to effect a one-for-tenreverse stock split of its Common Stock (the “Reverse Stock Split”) within 90days following the Closing Date;

###  

### **(h)****                                **The Company shall fail to reduce ChiefExecutive Officer Casper Zublin’s salary by $100,000 ratably over the 48 monthswithin 15 days following the Closing Date, with such reduction to be set forthin a written agreement between the Company and Mr. Zublin in form andsubstance reasonably satisfactory to the Purchasers;

###  

### **(i)****                                   **The Company shall fail to complete theconversion of all of the obligations outstanding under the Outstanding Notes intoCommon Stock of the Company at a conversion rate of $0.02 per share****on or before the earlier of (a) three business daysfollowing the effective date of the Reverse Stock Split, or (b) June 30,2006;

###  

### **(j)****                                   **Any judgment, writ, warrant of attachment orexecution or similar process will be issued or levied against a substantial part ofthe property of the Company and such judgment, writ, or similar process willnot be released, vacated or fully bonded within sixty (60) days after itsissue or levy; or

###  

### **(k)****                               **The Company shall fail to effect, as setforth on Schedule C of the respective Security and PledgeAgreements, the termination within (i) ten (10) calendar days of theClosing Date of each of those certain financing statements on file by LaurusMaster Fund, Ltd., C.W. Zublin, Jr. Trust, Glen Ackerman, and LisaAckerman in any jurisdiction purporting to evidence a security interest in anyassets of the Company or its affiliates and (ii) thirty (30) calendar daysof the Closing Date of any and all other financing statements on file in anyjurisdiction purporting to evidence a security interest in any assets of theCompany or its affiliates, other than the financing statements evidencing thesecurity interests of the Purchasers pursuant to the Security and PledgeAgreements.

###  

then,and in any such event, any holder of any Note may, by notice to the Company,declare the entire unpaid principal amount of the Note, all interest accruedand unpaid thereon and all other amounts payable under this Agreement to beforthwith due and payable, whereupon the Note, all such accrued interest andall such amounts will become and be forthwith due and payable (unless therewill have occurred an Event of Default under subsection 1.15(e) inwhich case all such amounts will automatically become due and payable), withoutpresentment, demand, protest or further notice of any kind, all of which arehereby expressly waived by the Company.

 

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# **ARTICLE II**

# ** **

# **REPRESENTATIONS AND WARRANTIES OF THE COMPANY**

# ** **

The Company represents andwarrants to the Purchasers that, as of the Closing and except as set forth inthe Disclosure Schedule attached as Schedule IV (whichDisclosure Schedule makes explicit reference to the particularrepresentation or warranty as to which exception is taken, which in each casewill constitute the sole representation and warranty as to which such exceptionwill apply):

 

## **SECTION 2.01.****                                  ****Organization,Qualifications and Corporate Power**.

##  

### **(a)****                                 **The Company is a corporation duly incorporated,validly existing and in good standing under the laws of the State of Delawareand is duly licensed or qualified to transact business as a foreign corporationand is in good standing in each jurisdiction in which the nature of thebusiness transacted by it or the character of the properties owned or leased byit requires such licensing or qualification, except where the failure to be solicensed or qualified does not have a material adverse effect on the Company’sbusiness or financial condition. The Company has the corporate power andauthority to own and hold its properties and to carry on its business as nowconducted and as proposed to be conducted, to execute, deliver and perform thisAgreement and the Security and Pledge Agreements, and to issue, sell anddeliver the Notes and the Warrants.

###  

### **(b)****                                 **The Company has no subsidiaries, other thanas set forth on Schedule IV. The Company does not (i) own ofrecord or beneficially, directly or indirectly, (A) any shares of capitalstock or securities convertible into capital stock of any other corporation or (B) anyparticipating interest in any partnership, joint venture or other non-corporatebusiness enterprise or (ii) control, directly or indirectly, any otherentity, other than as set forth on Schedule IV.

###  

## **SECTION 2.02.****                                  ****Authorizationof Agreements, Etc**.

##  

### **(a)****                                 **The execution and delivery by the Company ofthis Agreement and the Security and Pledge Agreements, the performance by theCompany of its obligations hereunder and thereunder, the issuance, sale anddelivery of the Notes and the Warrants have been duly authorized by allrequisite corporate action and will not (i) violate any provision of law,any order of any court or other agency of government, (ii) violate theCertificate of Incorporation or the By-laws of the Company, each as amended, (iii) violateany provision of any indenture, agreement or other instrument to which theCompany or any of its properties or assets is bound, (iv) conflict with,result in a breach of or constitute (with due notice or lapse of time or both)a default under any such indenture, agreement or other instrument, or (v) resultin the creation or imposition of any lien, charge, restriction, claim orencumbrance of any nature whatsoever upon any of the properties or assets ofthe Company, except in the case of clauses (i), (iii), (iv) and (v), aswould not have a material adverse effect on the Company.

###  

### **(b)****                                 **The Notes and the Warrants have been dulyauthorized and, when issued in accordance with this Agreement, will be free andclear of all liens, charges, restrictions, claims and encumbrances imposed byor through the Company. Except as set forth on Schedule IV, theissuance, sale and delivery of the Notes and the Warrants are not subject toany preemptive right of shareholders of the Company or to any right of firstrefusal or other right in favor of any person.

###  

## **SECTION 2.03.****                                  ****Validity**. Each of thisAgreement, the Security and Pledge Agreements and the Notes and the Warrants havebeen duly executed and delivered by the Company and constitute the legal, validand binding obligations of the Company, enforceable in accordance with theirterms.

 

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## **SECTION 2.04.****                                  ****AuthorizedCapital Stock**. The authorized capital stock of the Company consistsof 450,000,000 shares of Common Stock, $.0001 par value per share, and10,000,000 shares of preferred stock, $0.0001 par value per share (“PreferredStock”). As of the date of this Agreement, 81,164,636 shares of Common Stockand no shares of Preferred Stock were validly issued and outstanding, fullypaid and nonassessable. Except as disclosed in SEC Reports (as defined below),there are no options, warrants and convertible securities of the Company, andany other rights to acquire securities of the Company. All outstandingsecurities of the Company are validly issued, fully paid and nonassessable. Nostockholder of the Company is entitled to any preemptive rights with respect tothe purchase of or sale of any securities of the Company.

##  

## **SECTION 2.05.****                                  ****SECFilings, Other Filings and Regulatory Compliance**. Since January 1,2002, the Company has timely made all filings required to be made by it underthe Securities Exchange Act of 1934, as amended (the “Exchange Act”). TheCompany has delivered or made accessible to the Purchasers true, accurate andcomplete copies of (a) the Company’s Annual Report on Form 10-K forthe fiscal year ended June 30, 2005, (b) the Company’s QuarterlyReports on Form 10-Q for the fiscal quarters ended September 30, 2005and December 31, 2005, (c) the Company’s definitive proxy statementdated November 17, 2005 relating to its Annual Meeting of Stockholders,and (d) all the Company’s Current Reports on Form 8-K filed since July 1,2005 (collectively, the “SEC Reports”). The SEC Reports when filed, complied inall material respects with all applicable requirements of the Exchange Act andthe Sarbanes-Oxley Act of 2002, if and to the extent applicable, and the rules andregulations of the Securities and Exchange Commission (the “SEC”) thereunderapplicable to the SEC Reports. None of the SEC Reports, at the time of filing,contained any untrue statement of a material fact or omitted to state amaterial fact required to be stated therein or necessary in order to make thestatements therein not misleading in light of the circumstances in which theywere made. The Company has taken, or will have taken prior to the Closing, allnecessary actions to maintain eligibility of its Common Stock for trading onOTC Bulletin Board under all currently effective inclusion requirements. Eachbalance sheet included in the SEC Reports (including any related notes andschedules) fairly presents in all material respects the consolidated financialposition of the Company as of its date, and each of the other financialstatements included in the SEC Reports (including any related notes andschedules) fairly presents in all material respect the consolidated results ofoperations of the Company for the periods or as of the dates therein set forthin accordance with generally accepted accounting principles (“GAAP”)consistently applied during the periods indicated or as a result of year endadjustments and except as may be indicated in the notes thereto or, in thecase of interim consolidated financial statements, where information andfootnotes contained in such financial statements are not required to be incompliance with GAAP). Such financial statements included in the SEC Reportswere, at the time they were filed, consistent with the books and records of theCompany in all material respects and complied as to form in all materialrespects with then applicable accounting requirements and with the rules andregulations of the SEC with respect thereto. The Company keeps accountingrecords in which all material assets and liabilities, and all materialtransactions, including off-balance sheet transactions, of the Company arerecorded in accordance with GAAP.

##  

## **SECTION 2.06.****                                  ****GovernmentalApprovals**. Subject to the accuracy of the representations andwarranties of the Purchasers set forth in Article III, no registration orfiling with, or consent or approval of or other action by, any federal, stateor other governmental agency or instrumentality is or will be necessary for thevalid execution, delivery and performance by the Company of this Agreement, theissuance, sale and delivery of the Notes and the Warrants, other than filingspursuant to state securities laws (all of which filings have been made by theCompany, other than those which are required or permitted to be made after theClosing and which will be duly made on a timely basis) in connection with thesale of the Notes and the Warrants.

 

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## **SECTION 2.07.****                                  ****Offeringof the Notes**. Except for the filing of a registration statementon Form S-1 with the SEC on November 25, 2005 in connection with aproposed rights offering, which registration statement was withdrawn as of February 3,2006, neither the Company, nor any of its affiliates, nor any person acting onits or their behalf, has directly or indirectly made any offers or sales in anysecurity or solicited any offers to buy any security under circumstances thatwould require registration under the Securities Act of the issuance of theNotes and the Warrants to the Purchasers. Based upon the policy position of theSEC, as described in the SEC staff’s No-Action Letters dated June 26, 1990to Black Box Incorporated and February 28, 1992 to Squadron, Ellenoff,Pleasant & Lehrer, and the Purchasers’ representations in Article III,the issuance of the Notes and the Warrants to the Purchasers will not beintegrated with any other issuance of the Company’s securities (past, currentor future) for purposes of the Securities Act.

##  

## **SECTION 2.08.****                                  ****MaterialChanges**. Except as set forth in Schedule IVattached hereto, since June 30, 2005, there has not been (i) anydirect or indirect redemption, purchase or other acquisition by the Company ofany shares of Common Stock; (ii) any declaration, setting aside or paymentof any dividend or other distribution by the Company with respect to the CommonStock; (iii) any material liabilities (absolute, accrued or contingent)incurred or assumed by the Company, other than current liabilities incurred inthe ordinary course of business, liabilities under contracts entered into inthe ordinary course of business, purchase price payment obligations incurred inconnection with the acquisition of Red Rock Communications Solutions, Inc.and Integration Technologies, Inc. and liabilities not required to bereflected on the Company’s financial statements pursuant to GAAP; or (iv) anymortgage, pledge, security interest, encumbrance, lien or charge of any kind(including any conditional sale or other title retention agreement, any leasein the nature thereof, and the filing of or agreement to give any financingstatement under the Uniform Commercial Code or comparable law of anyjurisdiction in connection with such mortgage, pledge, security interest,encumbrance, lien or charge) (each, a “Lien”) or adverse claim on any of theCompany’s properties or assets, except for Liens for taxes not yet due andpayable, interest of lessors under operating capital leases, purchase moneyliens, amounts deposited for security for surety bonds, Liens incurred inconnection with the Company’s credit facility with New England TechnologyFinance, LLC, Liens incurred in the ordinary course of business or Liens thatare not material in amount to the Company and its subsidiaries.

##  

## **SECTION 2.09.****                                  ****Litigation**. Except asdisclosed in the Schedule IV attached hereto, there is no action,suit, proceeding or investigation pending or, to the Company’s knowledge,currently threatened against the Company or any of its subsidiaries thatquestions the validity of this Agreement or the right of the Company to enterinto it, or to consummate the transactions contemplated hereby, or that couldreasonably be expected to result, either individually or in the aggregate, in amaterial adverse effect on the Company. The foregoing includes, without limitation,actions pending or, to the Company’s knowledge, threatened involving the prioremployment of any of the Company’s employees or their use in connection withthe Company’s business of any information or techniques allegedly proprietaryto any of their former employers. Neither the Company nor any of itssubsidiaries is a party to or subject to the provisions of any order, writ,injunction, judgment or decree of any court or governmental authority. Exceptas disclosed in Schedule IV attached hereto, there is no action,suit, proceeding or investigation by the Company or any of its Subsidiariescurrently pending or which the Company or any of its subsidiaries currentlyintends to initiate, which could reasonably be expected to have a materialadverse effect.

##  

## **SECTION 2.10.****                                  ****Ownershipof Property; Liens**. The Company and each of its subsidiarieshas good and marketable title in fee simple, or a valid leasehold interest in,all of its real property; and good title to, or a valid leasehold interest in,all of its other property, and none such property is subject to any Lien exceptas set forth on Schedule IV attached hereto.

 

9

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## **SECTION 2.11.****                                  ****IntellectualProperty Rights**. To the best of its knowledge, the Company owns orpossesses the licenses or rights to use all patents, patent applications,patent rights, inventions, know-how, trade secrets, trademarks, trademarkapplications, service marks, service names, trade names and copyrightsnecessary to enable it to conduct its business as now operated (the “IntellectualProperty”). Except as set forth in Schedule IV attached hereto,there are no material outstanding options, licenses or agreements relating tothe Intellectual Property, nor is the Company bound by or a party to anymaterial options, licenses or agreements relating to the patents, patentapplications, patent rights, inventions, know-how, trade secrets, trademarks,trademark applications, service marks, service names, trade names or copyrightsof any other person or entity. Except as set forth in Schedule IVattached hereto, there is no claim or action or proceeding pending or, to theCompany’s knowledge, threatened that challenges the right of the Company withrespect to any Intellectual Property. Except as set forth in Schedule IVattached hereto, to the knowledge of the Company, the Company’s IntellectualProperty does not infringe any intellectual property rights of any other personwhich, if the subject of an unfavorable decision, ruling or finding would havea material adverse effect.

##  

## **SECTION 2.12.****                                  ****Insurance**. The Companyis insured by insurers of recognized financial responsibility against suchlosses and risks and in such amounts as management of the Company believes tobe prudent and customary in the businesses in which the Company is engaged.

##  

## **SECTION 2.13.****                                  ****Brokers**. The Companyhas no contract, arrangement or understanding with any broker, finder orsimilar agent with respect to the transactions contemplated by this Agreement.

##  

## **SECTION 2.14.****                                  ****Non-OperationalSubsidiaries**. Neither BugSolver.Com, Inc., TekInsighte-Government Services, Inc., nor TekInsight Research, Inc. operatesany business, nor does any such entity own any material assets.

##  

## **SECTION 2.15.****                                  ****FederalReserve Regulations**. The Company is not engaged in the businessof extending credit for the purpose of purchasing or carrying margin securities(within the meaning of Regulation G of the Board of Governors of the FederalReserve System), and no part of the proceeds of the Notes will be used topurchase or carry any margin security or to extend credit to others for thepurpose of purchasing or carrying any margin security or in any other mannerwhich would involve a violation of any of the regulations of the Board ofGovernors of the Federal Reserve System.

##  

## **SECTION 2.16.****                                  ****Office Headquarters****.**The sole lease agreement now currently in full forceand effect for the Company’s principal place of business is that certain OfficeLease Agreement, made and entered into as of the 21st day of July, 2003, by andbetween CA-Fairchild Corporate Center Limited Partnership, a Delaware limitedpartnership, as landlord, and Integration Technologies, Inc., a Californiacorporation, tenant (as amended, supplemented, or otherwise modified from timeto time) (the “Office Lease”).

##  

## **SECTION 2.17.****                                  ****RepresentationsComplete**. The representations and warranties made by theCompany in this Agreement, the statements made in any certificates furnished bythe Company pursuant to this Agreement, and the statements made by the Companyin any documents mailed, delivered or furnished to the Purchasers in connectionwith this Agreement, taken as a whole, do not contain and will not contain, asof their respective dates and as of the Closing Date, any misstatements ofmaterial fact or omit to state any material fact necessary in order to make thestatements contained herein or therein, in the light of the circumstances underwhich they were made, not misleading.

 

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# **ARTICLE III**

# ** **

# **REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS**

# ** **

Each Purchaser severallyrepresents and warrants (except, with respect to the first sentence of (f) below,as to which Lloyd I. Miller, III and Trust A-4 - Lloyd I. Miller, make norepresentation or warranty) to the Company that:

 

### **(a)****                                 **it is a “large institutional accreditedinvestor” as such term is used in the SEC staff’s No-Action Letter dated February 28,1992 to Squadron, Ellenoff, Pleasant & Lehrer, or, if a Purchaser isnot an institution, it beneficially owns and invests on a discretionary basisat least $100,000,000 in securities of issuers that are not affiliated withsuch Purchaser, and was not organized for the specific purpose of acquiring theNotes;

###  

### **(b)****                                 **it has sufficient knowledge and experience ininvesting in companies similar to the Company in terms of the Company’s stageof development so as to be able to evaluate the risks and merits of itsinvestment in the Company and it is able financially to bear the risks thereof;

###  

### **(c)****                                 **it has had an opportunity to discuss theCompany’s business, management and financial affairs with the Company’smanagement;

###  

### **(d)****                                 **the Notes being purchased by it are beingacquired for its own account for the purpose of investment and not with a viewto or for sale in connection with any distribution thereof;

###  

### **(e)****                                 **it understands that (i) the Notes havenot been registered under the Securities Act, by reason of their issuance in atransaction exempt from the registration requirements of the Securities Actpursuant to Section 4(2) thereof or Rule 505 or 506 promulgatedunder the Securities Act, (ii) the Notes must be held indefinitely unlessa subsequent disposition thereof is registered under the Securities Act or isexempt from such registration, (iii) the Notes will bear a legend to sucheffect and (iv) the Company will make a notation on its transfer books tosuch effect;

###  

### **(f)****                                   **in the case of SACC Partners, L.P., alllimited partnership action on the part of such Purchaser and its partnersnecessary for the performance of such Purchaser’s obligations under thisAgreement and the Security and Pledge Agreements, and the transactionscontemplated hereby and thereby, will be taken prior to the Closing. ThisAgreement and the Security and Pledge AgreementS are valid, binding andenforceable obligations of Purchaser, subject to applicable bankruptcy,insolvency, reorganization or similar laws relating to or affecting theenforcement of creditor’s rights and to the availability of the remedy ofspecific performance. The Purchaser has all requisite legal and limitedpartnership power to execute and deliver this Agreement and the Security andPledge Agreements;

###  

### **(g)****                                **it understands that (i) the Notes arebeing offered and sold to Purchaser in reliance upon specific exemptions fromthe registration requirements of United States federal and state securitieslaws, and (ii) that the Company is relying upon the truth and accuracy of,and Purchaser’s compliance with, the representations, warranties, agreements,acknowledgments and understandings of Purchaser set forth herein in order todetermine the availability of such exemptions and the eligibility of Purchaserto acquire the Notes;

###  

### **(h)****                                **The Company or its counsel have madeavailable all materials relating to the business, finances and operations ofthe Company and materials relating to the offer and sale of the Notes whichhave been specifically requested by such Purchaser. Each Purchaser has beenafforded the opportunity to ask questions of the Company, was permitted to meetwith the Company’s officers and has

 

11

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### received what such Purchaser believes to becomplete and satisfactory answers to any such inquiries. Neither such inquiriesnor any other due diligence investigation conducted by the Purchasers or any oftheir respective representations will modify, amend or affect such Purchaser’sright to rely on the Company’s representations and warranties contained herein.Each Purchaser understands that such Purchaser’s investment in the Securitiesinvolves a high degree of risk, including without limitation the risks anduncertainties disclosed in the  SECDocuments. Each Purchaser acknowledges it has reviewed the disclosurespresented under the caption “Risk Factors” in the Company’s Form 10-Qs andForm 10-Ks;

###  

### **(i)****                                   **it understands that no United States federalor state agency or any other government or governmental agency has passed uponor made any recommendation or endorsement of the Notes; and

###  

### **(j)****                                   **it is a resident of the jurisdiction setforth under Purchaser’s name on Schedule I hereto.

###  

# **ARTICLE IV**

# ** **

# **CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS**

# ** **

The obligation of eachPurchaser to purchase and pay for the Notes being purchased by it on theClosing Date is, at its option, subject to the satisfaction, on or before theClosing Date of the following conditions:

 

### **(a)****                                 ****Security and Pledge Agreements**. A Security and Pledge Agreement by andamong the Company, DynTek Services, Inc., and the holders of the SeniorNotes, in the form attached as Exhibit E (the “Senior Securityand Pledge Agreement”), and all related financing statements and a Securityand Pledge Agreement by and among the Company, DynTek Services, Inc. andthe holders of the Junior Note, in the Form attached as Exhibit G(the “Junior Security and Pledge Agreement”, and collectively with theSenior Security and Pledge Agreement, the “Security and Pledge Agreements”)and other similar instruments and documents, will have been executed anddelivered to the Purchasers by a duly authorized officer of the Company and aduly authorized officer of each of the subsidiaries of the Company partythereto.

###  

### **(b)****                                 ****Legal Opinion**. The Purchasers will have received anopinion of the Company’s counsel, dated the Closing Date, with respect to legalmatters customary for transactions of this type, in a form reasonablyacceptable to the Purchasers.

###  

### **(c)****                                 ****Representations and Warranties tobe True and Correct**. Therepresentations and warranties contained in Article II will be true,complete and correct on and as of the Closing Date with the same effect asthough such representations and warranties had been made on and as of such date(except to the extent that the representation or warranty speaks to a specificdate), and the President and Chief Financial Officer of the Company will havecertified to such effect to the Purchasers in writing.

###  

### **(d)****                                 ****Performance**. The Company will have performed andcomplied in all material respects with all covenants and agreements containedherein required to be performed or complied with by it prior to or at theClosing Date and the President and Chief Financial Officer of the Company willhave certified to the Purchasers in writing to such effect and to the furthereffect that all of the conditions set forth in this Article IV have beensatisfied.

 

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### **(e)****                                 ****All Proceedings to beSatisfactory**. Allcorporate and other proceedings to be taken by the Company in connection withthe transactions contemplated hereby and all documents incident thereto will besatisfactory in form and substance to the Purchasers and their counsel,and the Purchasers and their counsel will have received all such counterpart originalsor certified or other copies of such documents as they reasonably may request.

###  

### **(f)****                                   ****Supporting Documents**. The Purchasers and their counsel will havereceived copies of the following documents:

###  

#### (i)                                     (A) the Certificate of Incorporation ofthe Company, as amended, certified as of a recent date by the Secretary ofState of the State of Delaware, and (B) a certificate of said Secretarydated as of a recent date as to the due incorporation and good standing of theCompany, the payment of all excise taxes by the Company and listing alldocuments of the Company on file with said Secretary;

####  

#### (ii)                                  a certificate of the Secretary or anAssistant Secretary of the Company dated the Closing and certifying:  (A) that attached thereto is a true andcomplete copy of the Bylaws of the Company as in effect on the date of suchcertification; (B) that attached thereto is a true and complete copy ofall resolutions adopted by the Board of Directors  of the Company authorizing the execution,delivery and performance of this Agreement and the Security and PledgeAgreements, the issuance, sale and delivery of the Notes and the Warrants, andthat all such resolutions are in full force and effect and are all theresolutions adopted in connection with the transactions contemplated by thisAgreement; (C) that the Certificate of Incorporation of the Company hasnot been amended since the date of the last amendment referred to in thecertificate delivered pursuant to clause (i)(B) above; and (D) to theincumbency and specimen signature of each officer of the Company executing anyof this Agreement, the Security and Pledge Agreements, the Notes, the Warrantsand any certificate or instrument furnished pursuant hereto, and acertification by another officer of the Company as to the incumbency andsignature of the officer signing the certificate referred to in this clause(ii); and

####  

#### (iii)                               such additional supporting documents andother information with respect to the operations and affairs of the Company asthe Purchasers or their counsel reasonably may request.

####  

All such documents will besatisfactory in form and substance to the Purchasers and their counsel.

 

### **(g)****                                ****Preemptive and First RefusalRights**. All stockholdersof the Company having any preemptive or first refusal rights with respect tothe issuance of the Notes will have irrevocably waived the same in writing orall such rights will have expired.

###  

### **(h)****                                ****Fees of Purchasers’ Counsel**. The Company will have paid in accordancewith Section 7.01 the fees and disbursements of each Purchaser’s counselinvoiced at the Closing; provided, however, that the Purchasers may deductsuch amounts from the consideration to be delivered to the Company for thepurchase of the Notes pursuant to Section 1.03.

###  

### **(i)****                                   ****Termination by Either Purchaser**. Neither Purchaser will be obligated tocomplete the purchase of the Notes if the other Purchaser elects not tocomplete the transaction.

###  

### **(j)****                                   ****Conversion of Existing Debt**. On or before the Closing Date, the Companyshall have entered into a binding, written Conversion and Settlement Agreement,substantially in the form of Exhibit C with each and everyholder of the 9% Notes, the Amended 9% Notes, the Bridge Notes and theAcquisition Notes, respectively.

 

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### **(k)****                               ****Board of Directors**. Effective as of the Closing Date, RobertWebber and Marshall Toplansky shall have resigned from the Company’s Board ofDirectors, and Alan Howe shall have been appointed to the Company’s Board ofDirectors.

###  

### **(l)****                                   ****Renegotiation of Trade Debt**. At least $575,000 in face amount of theCompany’s existing unsecured trade debt set forth on Schedule IIshall have been renegotiated pursuant to the terms of a Settlement and ReleaseAgreement substantially in the form of Exhibit B, and suchSettlement and Release Agreements shall have been duly entered into by theCompany with those certain trade creditors pursuant to binding, writtenagreements.

###  

### **(m)****                             ****Equity Investment**. A private placement of the Company’s CommonStock of at least $1,000,000 at a price per share of $0.02 by Network 1Financial Services, Inc. (the “Private Placement”) shall be subjectto a binding, written agreement with the Company which shall close before the closingof this Agreement.

###  

### **(n)****                                ****Warrant****.**The Company shall have issued to thePurchasers of Senior Notes *pro rata*,according to each such Purchaser’s proportion of the aggregate principal amountof the Senior Notes, warrants for the purchase of an aggregate of 19.9% of theCommon Stock of the Company, exercisable at $0.001 per share, in the form setforth as Exhibit D.

###  

# **ARTICLE V**

# ** **

# **COVENANTS OF THE COMPANY**

# ** **

The Company agrees that, solong as any Notes are outstanding, except to the extent compliance in any caseor cases is waived in writing by the holders of the entire aggregate unpaidprincipal amount of the Notes then outstanding:

 

## **SECTION 5.01.****                                  ****FinancialStatements, Reports, Etc**. The Company will furnishto each Purchaser:

##  

### **(a)****                                 **within ninety (90) days after the end ofeach fiscal year of the Company a consolidated balance sheet of the Company andits subsidiaries, if any, as of the end of such fiscal year and the relatedconsolidated statements of income for the fiscal year then ended, prepared inaccordance with GAAP and certified by a firm of independent public accountantsof recognized national standing selected by the Board of Directors of theCompany;

###  

### **(b)****                                 **within forty five (45) days after the end ofeach fiscal quarter in each fiscal year a consolidated balance sheet of theCompany and its subsidiaries, if any, and the related consolidated statementsof income unaudited but prepared in accordance with generally acceptedaccounting principles and certified by the Chief Financial Officer of theCompany, such consolidated balance sheet to be as of the end of such fiscalquarter and such consolidated statements of income to be for such fiscalquarter and for the period from the beginning of the fiscal year to the end ofsuch fiscal quarter;

###  

### **(c)****                                 **promptly after the commencement thereof,notice of all actions, suits, claims, proceedings, investigations and inquiriesof the type described in Section 2.09 of this Agreement that couldmaterially adversely affect the Company or any of its subsidiaries, if any;

 

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### **(d)****                                 **promptly upon sending, making available orfiling the same, all press releases, reports and financial statements that theCompany sends or makes available to its stockholders or directors or files withthe SEC; and

###  

### **(e)****                                 **promptly, from time to time, such otherinformation regarding the business, prospects, financial condition, operations,property or affairs of the Company and its subsidiaries as such Purchaserreasonably may request.

###  

Notwithstanding this Section 5.01,so long as the Company is required to make filings pursuant to the Exchange Actand makes such filings in a timely manner, the Company will be deemed to havefurnished to the Purchasers the financial statements and other reports requiredby this Section 5.01.

 

## **SECTION 5.02.****                                  ****CorporateExistence; Maintenance of Business**. The Company will, and willcause each of its subsidiaries to, preserve and maintain its existence. TheCompany will, and will cause each of its subsidiaries to, preserve and keep inforce and effect all licenses, permits, franchises, approvals, patents,trademarks, trade names, trade styles, copyrights, and other proprietary rightsnecessary to the conduct of its business where the failure to do so couldreasonably be expected to have a material adverse effect.

##  

## **SECTION 5.03.****                                  ****Properties,Insurance**. The Company will maintain as to its properties andbusiness, with financially sound and reputable insurers, insurance against suchcasualties and contingencies and of such types and in such amounts as iscustomary for companies similarly situated, which insurance will be deemed bythe Company to be sufficient.

##  

## **SECTION 5.04.****                                  ****Useof Proceeds**. The Company will use the proceeds from the sale ofthe Senior Notes, less the amounts withheld pursuant to Section 7.01,solely to repay all outstanding obligations of the Company to the Laurus MasterFund Ltd,. as set forth on Schedule V. The Company will use theproceeds from the sale of the Junior Note, less the amounts withheld pursuantto Section 7.01, solely to repay any remaining outstanding obligations tothe Laurus Master Fund, Ltd. after the proceeds of the Senior Notes aredepleted, with any remaining proceeds from the Junior Notes to be used solelyfor the purposes set forth on Schedule V.

##  

## **SECTION 5.05.****                                  ****Compliancewith Laws**. The Company will comply with all applicable laws,rules, regulations and orders, noncompliance with which could materiallyadversely affect its business or condition, financial or otherwise.

##  

## **SECTION 5.06.****                                  ****Keepingof Records and Books of Account**. The Company will keepadequate records and books of account, in which complete entries will be madein accordance with generally accepted accounting principles consistentlyapplied, reflecting all financial transactions of the Company, and in which,for each fiscal year, all proper reserves for depreciation, depletion,obsolescence, amortization, taxes, bad debts and other purposes in connectionwith its business will be made.

##  

## **SECTION 5.07.****                                  ****Dividendsand Certain Other Restricted Payments**. The Company will not, norwill it permit any of its subsidiaries to, (a) declare or pay anydividends on or make any other distributions in respect of any class or series ofits capital stock or other equity interests or (b) directly or indirectlypurchase, redeem, or otherwise acquire or retire any of its capital stock orother equity interests or any warrants, options, or similar instruments toacquire the same.

##  

## **SECTION 5.08.****                                  ****MaterialContracts**. The Company will not, nor will it permit any ofits subsidiaries to, enter into any contract, agreement or business arrangementwhich requires annual expenditures of $2,500,000 or more.

 

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## **SECTION 5.09.****                                  ****CapitalExpenditures**. The Company will not, nor will it permit any ofits subsidiaries to, incur any Capital Expenditures other than in the ordinarycourse consistent with past practice. For purposes of this Agreement, “CapitalExpenditures” means, with respect to any person or entity for any period, theaggregate amount of all expenditures (whether paid in cash or accrued as aliability) by such person or entity during that period for the acquisition orleasing (pursuant to a capital lease) of fixed or capital assets or additionsto property, plant, or equipment (including replacements, capitalized repairs,and improvements) which should be capitalized on the balance sheet of suchperson or entity in accordance with GAAP.

##  

## **SECTION 5.10.****                                  ****Mergers, Consolidationsand Asset Sales**.The Company will not, nor will it permit any of its subsidiaries to, be a partyto any merger or consolidation, or sell, transfer, lease or otherwise disposeof all or any substantial part of its assets; provided, however, that theCompany shall have the sole discretion to discontinue its or any of itssubsidiaries’ Business, Process Outsourcing, or BPO, services segment at anytime. The Company will not, nor will it permit any of its subsidiaries to sell,transfer, lease or otherwise make any Substantial Asset Sale (as such term isdefined in Section 1.06) for consideration other than cash while the Notesor any part thereof remain outstanding.

##  

## **SECTION 5.11.****                                  ****Acquisitions**. The Companywill not, nor will it permit any of its subsidiaries to, directly orindirectly, acquire all or any substantial part of the assets or businessof any other entity or division thereof.

##  

## **SECTION 5.12.****                                  ****Prepaymentof Indebtedness**. The Company will not, nor will it permit any ofits subsidiaries, to prepay any indebtedness for borrowed money; provided,however, that this Section 5.12 will not prohibit the Company fromredeeming the Notes pursuant to the terms of this Agreement.

##  

## **SECTION 5.13.****                                  ****Issuanceof Shares**. The Company will not, nor will it permit any ofits subsidiaries to issue, assign, sell or transfer any shares of capital stockor other equity interests of the Company or such subsidiary; *provided, however*, that the foregoing will not operate toprevent (a) Liens on the capital stock or other equity interests ofsubsidiaries of the Company pursuant to the amended and restated Security andPledge Agreements; (b) the issuance, sale, and transfer to any person ofany shares of Common Stock of the Company pursuant to (i) the PrivatePlacement or warrants issued in connection therewith or the issuance by theCompany of shares of Common Stock upon the exercise of such warrants, (ii) executionand consummation of the terms of the Conversion and Settlement Agreements, or (iii) theSettlement and Release Agreements; (c) the issuance of the Junior Note to thePurchaser set forth on Schedule I hereto, or the issuance of Common Stockupon conversion thereof; (d) the issuance by the Company to the Purchasersof the warrants in the form set forth in Exhibit D hereto, or theissuance by the Company of shares of Common Stock upon the exercise of suchwarrants; (e) the issuance of options or rights to purchase Common Stockunder the Company’s equity incentive plans, as amended, in effect as of thedate hereof; or (f) the issuance of shares upon the exercise or conversionof securities exercisable or convertible into shares of the Company’s CommonStock that are outstanding as of the date hereof or otherwise permitted to beissued under this Section 5.13.

##  

## **SECTION 5.14.****                                  ****Executiveand Officer Compensation**. The Company will not, norwill it permit any of its subsidiaries to, grant any increase in thecompensation of officers or executive employees (excluding any such increaserequired under a currently effective employment agreement by and between suchofficer or executive employee and the Company).

##  

## **SECTION 5.15.****                                  ****Changein the Nature of Business**. The Company will not, norwill it permit any of its subsidiaries to, engage in any business or activityother than the general nature of the business engaged in by it as of theClosing Date or discontinue its engagement in any business or activity

 

16

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## engaged in by it as of theClosing Date; provided, however, that the Company shall have the solediscretion to discontinue its or any of its subsidiaries’ BPO services segmentat any time.

##  

## **SECTION 5.16.****                                  ****Renegotiationof Trade Debt**. The Company will continue to use its reasonable bestefforts to renegotiate the entire amount of its trade debt set forth on Schedule II.

##  

## **SECTION 5.17.****                                  ****ReverseStock Split**. The Company will use its reasonable best effortsto effect the Reverse Stock Split within 90 days following the Closing Date.

##  

## **SECTION 5.18.****                                  ****VotingRights for Warrants and Junior Note**. Unless enforcement of thiscovenant is waived in writing by written notice to the Company given by all ofthe Senior Note holders not later than thirty (30) calendar days prior tothe record date of the Company’s next Annual Meeting of Stockholders, theCompany, at its next Annual Meeting of Stockholders will use reasonable bestefforts to obtain stockholder approval of an amendment to the Company’s SecondAmended and Restated Certificate of Incorporation to confer upon the holder of (i) theWarrants the power to vote, in respect to the corporate affairs and managementof the Company, that number of shares of Common Stock into which such Purchaser’sWarrant may then be exercised in accordance with Section 221 of theGeneral Corporation Law of the State of Delaware and (ii) the Junior Notethe power to vote, in respect to the corporate affairs and management of theCompany, that number of shares of Common Stock into which such Junior Note may thenbe converted in accordance with Section 221 of the General Corporation Lawof the State of Delaware

##  

## **SECTION 5.19.****                                  ****Compliancewith Security and Pledge Agreements**. The Company will comply atall times with all of the terms and conditions of the Security and PledgeAgreements.

##  

## **SECTION 5.20.****                                  ****Terminationof Financing Statements**. Either within ten (10) calendardays after the Closing Date or thirty (30) calendar days after the ClosingDate, as more specifically set forth on Schedule C of therespective Security and Pledge Agreements, the Company will take all necessary actionsto terminate all financing statements in any jurisdiction which purport toevidence a security interest in any asset of the Company or its affiliates inrespect of all entities set forth on Schedule C of the respectiveSecurity and Pledge Agreements, including, without limitation, in favor of theLaurus Master Fund, Ltd. or any affiliate thereof; provided, however, theCompany will not terminate any financing statement evidencing a securityinterest of any of the Purchasers pursuant to the Security and PledgeAgreements.

##  

## **SECTION 5.21.****                                  ****DepositAccount****.**Within (i) ten (10) businessdays after the Closing Date, the Company shall take all necessary actions to execute,deliver and establish a control agreement by and for the benefit of thePurchasers in respect of that certain deposit account held by the Company at LaSalleBank Midwest N.A.(Account No. 6856286387 and ABA No. 07200805) andsuch control agreement shall be in form and substance reasonably satisfactoryto the Purchasers and accompanied by an opinion of counsel to the Companyaddressed to the Purchasers regarding the creation and perfection of thePurchasers’ respective security interests in such deposit account and suchother matters as the Purchasers may reasonably request and (ii) fifteen(15) business days after the Closing Date, the Company shall use commercially reasonablebest efforts to execute, deliver and establish a control agreement by and forthe benefit of the Purchasers in respect of that certain escrow accountestablished in connection with an Escrow Agreement, dated as of September 22,1997, by and among, Dyntek, Inc. (f/k/a Data Systems Network Corporation,a predecessor entity to Dyntek, Inc.), Hooper Holmes, Inc. andJPMorgan Chase Bank, N.A. (f/k/a NBD Bank which was a predecessor entity toJPMorgan Chase Bank, N.A.) (as amended, supplemented or modified from time totime) (the “Escrow Account”) and such control agreement shall be in form andsubstance reasonably satisfactory to the Purchasers and accompanied by anopinion of counsel to the Company addressed to the Purchasers regarding thecreation and perfection

 

17

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## of the Purchasers’ respectivesecurity interests in such Escrow Account and such other matters as thePurchasers may reasonably request.

##  

## **SECTION 5.22.****                                  ****Mortgage Leasehold****.**Within thirty (30) business days after the ClosingDate, the Company shall use its reasonable best efforts to take all action necessaryto execute, deliver and establish a mortgage over the Company’s leaseholdinterest in its office headquarters referred to in Section 2.16 hereof forthe benefit of the Purchasers, with such mortgage to be in form andsubstance satisfactory to the Purchasers and accompanied by an opinion ofcounsel to the Company addressed to the Purchasers regarding the creation andperfection of the Purchasers’ respective security interests in such leaseholdinterest and such other matters as the Purchasers may reasonably request.

##  

## **SECTION 5.23.****                                  ****Delivery of Certificates.**Within five (5) business days of theClosing Date, the Company shall deliver to the Purchasers the certificates forall shares or units of DynTek Services, Inc. evidenced by a certificateduly endorsed in blank for transfer or accompanied by an appropriate assignmentor an appropriate undated stock power or powers, in every case sufficient totransfer title thereto.

##  

# **ARTICLE VI**

# ** **

# **REGISTRATION**

# ** **

## **SECTION 6.01.****                                  ****PiggybackRegistration****.**If, prior to June 30,2006, the Company proposes to register (including for this purpose aregistration effected by the Company for stockholders other than the Purchasers)the sale of any of its securities under the Securities Act, then the Companywill promptly give the Purchasers written notice thereof and will use itsreasonable best efforts to include in such registration (A) all or any part ofthe shares of Common Stock issuable by the Company upon the exercise ofwarrants or conversion of notes (including, for the avoidance of doubt, theJunior Note) issued by the Company to SACC Partners L.P., Lloyd I. Miller, IIIand the Purchasers hereto (i) on October 26, 2005 and (ii) onthe Closing Date; and (B) all Conversion Shares (as such term is definedin those certain Conversion and Settlement Agreements executed as of the datehereof by and between (x) the Company and SACC Partners, L.P. and (y) theCompany and Lloyd I. Miller, III) (collectively, the “RegistrableSecurities”). This requirement does not apply to Company registrations on Form S-4or S-8 or their equivalents relating to equity securities to be issued solelyin connection with an acquisition of any entity or business or equitysecurities issuable in connection with stock option or other employee benefitplans. Each Purchaser must give its request for registration under this paragraphto the Company in writing within 10 days after receipt from the Company ofnotice of such pending registration. If the registration for which the Companygives notice is a public offering involving an underwriting, the Company willso advise the Purchasers as part of the above-described written notice. Inthat event, if the managing underwriter(s) of the public offering impose alimitation on the number of shares of Common Stock that may be included inthe Registration Statement because, in such underwriter(s)’ judgment, suchlimitation would be necessary to effect an orderly public distribution, thenthe Company will be obligated to include only such limited portion, if any, ofthe Registrable Securities with respect to which the Purchasers have requestedinclusion hereunder. Any exclusion of Registrable Securities will be made prorata among all holders of the Company’s securities seeking to include shares ofCommon Stock in proportion to the number of shares of Common Stock sought to beincluded by those holders. However, the Company will not exclude anyRegistrable Securities unless the Company has first excluded all outstandingsecurities the holders of which are not entitled by right to inclusion of suchsecurities in such Registration Statement or are not entitled pro ratainclusion with the Registrable Securities.

##  

## **SECTION 6.02.****                                  ****MandatoryRegistration**. If, at anytime on or after June 30, 2006, theresale of any Registrable Securities have not been registered by the Companypursuant to Section 6.01

 

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## hereof, the Purchasers may delivernotice to the Company to require that the Company register all RegistrableSecurities on a registration statement on Form S-1, or other form thenavailable to the Company under applicable SEC rules and regulations (the “RegistrationStatement”), covering the resale of all of the Registrable Securities. The dateon which the Company receives such notice is referred to herein as the “DemandDate.”  The Company shall use commerciallyreasonable best efforts (i) to cause such Registration Statement to befiled under the Securities Act as promptly as practicable after receipt ofnotice of such demand, but in any event not more than 30 days following theDemand Date and (ii) to cause such Registration Statement to be declaredeffective under the Securities Act as promptly as practicable, but in any eventno later than 90 days following the Demand Date (the “Demand Effective Date”). However,so long as the Company has filed the Registration Statement within 30 daysafter the Demand Date, (a) if the SEC takes the position that registrationof the resale of the Registrable Securities by the Purchasers is not availableunder applicable laws, rules and regulations and that the Company mustregister the offering of the Registrable Securities as a primary offering bythe Company, or (b) if the Registration Statement receives SEC review,then the Demand Effective Date will be the 120th day after the Demand Date. Inthe case the SEC takes the position that resale registration is not available,the Company will, within 40 business days after the date the Company receivessuch SEC response, file a Registration Statement as a primary offering. TheCompany’s best efforts will include, without limitation, promptly responding toall comments received from the staff of the SEC. If the Company receivesnotification from the SEC that the Registration Statement will receive noaction or review from the SEC, then the Company will cause the Registration Statementto become effective within five business days after such SEC notification. Oncethe Registration Statement is declared effective by the SEC, the Company willcause the Registration Statement to remain effective throughout theRegistration Period, except as permitted under this Section. “RegistrationPeriod” means the period between the Demand Date and the earlier of the date on(i) which (x) all of the Registrable Securities have been sold by thePurchasers pursuant to a Registration Statement and (y) are freelytradable under the Securities Act, or (ii) all the Registrable Securities may beimmediately sold by the Purchasers without registration and without restrictionas to the number of Registrable Securities to be sold, pursuant to Rule 144or otherwise. On the date of each monthly anniversary of the date on which anybreach of this Section 6.02 first occurs (including failure to file aRegistration Statement or to cause a Registration Statement to be declaredeffective within the time periods set forth herein) until the applicabledefault is cured (each, a “Payment Date”), the Company shall issue to thePurchasers as damages additional shares of the Company’s Common Stock equal to2.0% of the aggregate amount of the Registrable Securities, and all such sharesshall become Registrable Securities; *provided, however*,that the total number of shares of the Company’s Common Stock payable pursuantto this Section 6.02 to any Purchaser shall not exceed the number ofshares, less one share, which, if issued, would have, at the time of theClosing Date or Payment Date, required stockholder approval of such issuancepursuant to Section 4350(i)(1)(D) of the Nasdaq Marketplace Rules ifthe Company is then subject to such rule. In the event the number of shares ofthe Company’s Common Stock issuable under this Section 6.02 is restrictedby the limitations of the previous sentence, the Company may waive suchlimitation or, at the Company’s election, the balance of the damages payable bythe Company pursuant to this Section 6.02 may be paid in cash(valuing the shares not so issued at the average of the closing prices of theCompany’s Common Stock over the twenty (20) trading days immediately precedingthe one-month anniversary of the default which requires the issuance of shares)on the applicable Payment Date in accordance with payment instructions providedby each Purchaser.

##  

## **SECTION 6.03.****                                  ****ContinuedEffectiveness of Registration Statement**. Subject to the limitationsset forth in Section 6.08, the Company will keep the RegistrationStatement covering the Registrable Securities effective under Rule 415 atall times during the Registration Period. In the event that the number ofshares available under a Registration Statement filed pursuant to thisAgreement is insufficient to cover all of the Registrable Securities issued,the Company will (if permitted) amend the Registration Statement or file a newRegistration Statement (on the short form available therefor, if

 

19

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## applicable), or both, so asto cover all of the Registrable Securities. The Company will file suchamendment or new Registration Statement as soon as practicable, but in no eventlater than 30 business days after the necessity therefor arises (based upon themarket price of the Common Stock and other relevant factors on which theCompany reasonably elects to rely). The Company will use its best efforts tocause such amendment or new Registration Statement to become effective as soonas is practicable after the filing thereof, but in no event later than 90 daysafter the date on which the Company reasonably first determines the needtherefor.

##  

## **SECTION 6.04.****                                  ****Accuracyof Registration Statement**. Any Registration Statement(including any amendments or supplements thereto and prospectuses containedtherein) filed by the Company covering Registrable Securities will not containany untrue statement of a material fact or omit to state a material factrequired to be stated therein, or necessary to make the statements therein, inlight of the circumstances in which they were made, not misleading. The Companywill prepare and file with the SEC such amendments (including post-effectiveamendments) and supplements to the Registration Statement and the prospectusused in connection with the Registration Statement as may be necessary topermit sales pursuant to the Registration Statement at all times during theRegistration Period, and, during such period, will comply with the provisionsof the Securities Act with respect to the disposition of all RegistrableSecurities of the Company covered by the Registration Statement until thetermination of the Registration Period, or if earlier, until such time as allof such Registrable Securities have been disposed of in accordance with theintended methods of disposition by the seller or sellers thereof as set forthin the Registration Statement.

##  

## **SECTION 6.05.****                                  ****FurnishingDocumentation**. The Company will furnish to the Purchasers, or totheir legal counsel, (a) promptly after such document is filed with theSEC, one copy of any Registration Statement filed pursuant to this Agreementand any amendments thereto, each preliminary prospectus and final prospectusand each amendment or supplement thereto; and (b) a number of copies of aprospectus, including a preliminary prospectus, and all amendments andsupplements thereto, and such other documents as the Purchasers may reasonablyrequest in order to facilitate the disposition of the Registrable Securitiesowned by the Purchasers. The Company will promptly notify by facsimile or emailthe Purchasers of the effectiveness of the Registration Statement and anypost-effective amendment.

##  

## **SECTION 6.06.****                                  ****AdditionalObligations**. The Company will use its best efforts to (a) registerand qualify the Registrable Securities covered by a Registration Statementunder such other securities or blue sky laws of such jurisdictions as thePurchasers reasonably request, (b) prepare and file in those jurisdictionsany amendments (including post-effective amendments) and supplements to suchregistrations and qualifications as may be necessary to maintain theireffectiveness during the Registration Period, (c) take any other actionsnecessary to maintain such registrations and qualifications in effect at alltimes during the Registration Period, and (d) take any other actionsreasonably necessary or advisable to qualify the Registrable Securities forsale in such jurisdictions. Notwithstanding the foregoing, the Company is notrequired, in connection with such obligations, to (i) qualify to dobusiness in any jurisdiction where it would not otherwise be required toqualify but for this Section 6.06, (ii) subject itself to generaltaxation in any such jurisdiction, (iii) file a general consent to serviceof process in any such jurisdiction, (iv) provide any undertakings thatcause material expense or material burden to the Company, or (v) make anychange in its charter or bylaws, which in each case the Board of Directors ofthe Company determines to be contrary to the best interests of the Company andits stockholders.

##  

## **SECTION 6.07.****                                  ****UnderwrittenOfferings**. If the Purchasers select underwriters reasonablyacceptable to the Company for an underwritten offering, the Company will enterinto and perform its obligations under an underwriting agreement in usualand customary form including, without

 

20

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## limitation, customaryindemnification and contribution obligations, with the managing underwriter ofsuch offering.

##  

## **SECTION 6.08.****                                  ****Suspensionof Registration**.

##  

### **(a)****                                 **The Company will notify (by telephone andalso by facsimile and reputable overnight courier) the Purchasers of thehappening of any event of which the Company has knowledge as a result of whichthe prospectus included in the Registration Statement as then in effectincludes an untrue statement of a material fact or omits to state a materialfact required to be stated therein or necessary to make the statements therein,in light of the circumstances under which they were made, not misleading. TheCompany will make such notification as promptly as practicable (but in no eventmore than two business days) after the Company becomes aware of the event, willpromptly (but in no event more than ten business days) prepare and file asupplement or amendment to the Registration Statement to correct such untruestatement or omission, and will deliver a number of copies of such supplementor amendment to the Purchasers as they may reasonably request.

###  

### **(b)****                                 **Notwithstanding the obligations under Section 6.08(a),if in the good faith judgment of the Company, following consultation with legalcounsel, it would be detrimental to the Company and its stockholders forresales of Registrable Securities to be made pursuant to the RegistrationStatement due to the existence of a material development or potential materialdevelopment involving the Company which the Company would be obligated todisclose in the Registration Statement, but which disclosure would be prematureor otherwise inadvisable at such time or would reasonably be expected to have amaterial adverse effect upon the Company and its stockholders, the Company willhave the right to suspend the use of the Registration Statement for a period ofnot more than forty-five (45) days; *provided, however*,that the Company may so defer or suspend the use of the RegistrationStatement no more than one time in any twelve-month period.

###  

### **(c)****                                 **Subject to the Company’s rights under this Article VI,the Company will use its reasonable best efforts to prevent the issuance of anystop order or other suspension of effectiveness of a Registration Statementand, if such an order is issued, will use its best efforts to obtain thewithdrawal of such order at the earliest possible time and to notify thePurchasers of the issuance of such order and the resolution thereof.

###  

### **(d)****                                 **Notwithstanding anything to the contrarycontained in this Agreement, if the use of the Registration Statement issuspended by the Company, the Company will promptly (but in no event more than twobusiness days) give notice of the suspension to the Purchasers, and willpromptly (but in no event more than two business days) notify the Purchasers assoon as the use of the Registration Statement may be resumed.

###  

## **SECTION 6.09.****                                  ****TransferAgent; Registrar**. The Company will provide a transfer agent andregistrar, which may be a single entity, for the Registrable Securitiesnot later than the effective date of the Registration Statement.

##  

## **SECTION 6.10.****                                  ****ShareCertificates**. The Company will cooperate with the Purchasers andwith the managing underwriter(s), if any, to facilitate the timely preparationand delivery of certificates (not bearing any restrictive legends) representingRegistrable Securities to be offered pursuant to a Registration Statement and willenable such certificates to be in such denominations or amounts as the case may be,and registered in such names as the Purchasers or the managing underwriter(s),if any, may reasonably request.

 

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## **SECTION 6.11.****                                  ****Planof Distribution**. At the reasonable request of the Purchasers, theCompany will promptly prepare and file with the SEC such amendments (includingpost-effective amendments) and supplements to the Registration Statement, andthe prospectus used in connection with the Registration Statement, as may benecessary in order to change the plan of distribution set forth in suchRegistration Statement.

##  

## **SECTION 6.12.****                                  ****SecuritiesLaws Compliance**. The Company will comply with all applicable lawsrelated to any Registration Statement relating to the offer and sale ofRegistrable Securities and with all applicable rules and regulations ofgovernmental authorities in connection therewith (including, withoutlimitation, the Securities Act, the Exchange Act and the rules andregulations promulgated by the SEC).

##  

## **SECTION 6.13.****                                  ****FurtherAssurances**. The Company will take all other reasonable actionsas the Purchasers or the underwriters, if any, may reasonably request toexpedite and facilitate disposition by such Purchaser of the RegistrableSecurities pursuant to the Registration Statement.

##  

## **SECTION 6.14.****                                  ****Expenses**. The Companywill bear all reasonable expenses, other than underwriting discounts andcommissions, and transfer taxes, if any, incurred in connection withregistrations, filings or qualifications pursuant to Article VI of thisAgreement, including, without limitation, all registration, listing andqualifications fees, printers and accounting fees, the fees and disbursementsof counsel for the Company, and the reasonable fees and disbursements of thePurchasers’ legal counsel.

##  

## **SECTION 6.15.****                                  ****Indemnification**. In the eventthat any Registrable Securities are included in a Registration Statement underthis Agreement:

##  

### **(a)****                                 **To the extent permitted by law, the Companywill indemnify, defend and hold harmless each Purchaser that holds RegistrableSecurities, and agents, employees, attorneys, accountants, underwriters (asdefined in the Securities Act) for such Purchasers and any directors orofficers of such Purchasers or such underwriter and any person who controls thePurchasers or such underwriter within the meaning of the Securities Act or theExchange Act (each, a “Purchaser Indemnified Person”) against any losses,claims, damages, expenses or liabilities (collectively, and together withactions, proceedings or inquiries by any regulatory or self-regulatoryorganization, whether commenced or threatened in respect thereof, “Claims”) towhich any of them become subject under the Securities Act, the Exchange Act or otherwise,insofar as such Claims arise out of or are based upon any of the followingstatements, omissions or violations in a Registration Statement filed pursuantto this Agreement, any post-effective amendment thereof or any prospectusincluded therein:  (a) any untruestatement or alleged untrue statement of a material fact contained in theRegistration Statement or any post-effective amendment thereof or the omissionor alleged omission to state therein a material fact required to be statedtherein or necessary to make the statements therein not misleading, (b) anyuntrue statement or alleged untrue statement of a material fact contained inthe prospectus or any preliminary prospectus (as it may be amended orsupplemented) or the omission or alleged omission to state therein any materialfact necessary to make the statements made therein, in light of thecircumstances under which the statements therein were made, not misleading, or (c) anyviolation or alleged violation by the Company of the Securities Act, theExchange Act or any other law, including without limitation any statesecurities law or any rule or regulation thereunder (the matters in theforegoing clauses (a) through (c) being, collectively, “Violations”).Subject to the restrictions set forth herein with respect to the number oflegal counsel, the Company will reimburse the Purchasers and each suchattorney, accountant, underwriter or controlling person and each such otherPurchaser Indemnified Person, promptly as such expenses are incurred and aredue and payable, for any legal fees or other reasonable expenses incurred bythem in connection with investigating or defending any Claim. Notwithstandinganything to the contrary contained herein, the

 

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### indemnification contained in this Section 6.15(i) does not apply to a Claim by a Purchaser Indemnified Person arisingout of or based upon a Violation that occurs in reliance upon and in conformitywith information furnished in writing to the Company by such PurchaserIndemnified Person expressly for use in the Registration Statement or any suchamendment thereof or supplement thereto, if such prospectus or supplementthereto was timely made available by the Company; and (ii) does not applyto amounts paid in settlement of any Claim if such settlement is made withoutthe prior written consent of the Company, which consent will not beunreasonably withheld. This indemnity obligation will remain in full force andeffect regardless of any investigation made by or on behalf of the PurchaserIndemnified Persons and will survive the transfer of the Registrable Securitiesby the Purchasers.

###  

### **(b)****                                 **In connection with any Registration Statementin which a Purchaser is participating, each such Purchaser will indemnify andhold harmless, the Company, each of its directors, each of its officers whosigns the Registration Statement, each person, if any, who controls the Companywithin the meaning of the Securities Act or the Exchange Act, and any otherstockholder selling securities pursuant to the Registration Statement or any ofits directors or officers or any person who controls such stockholder withinthe meaning of the Securities Act or the Exchange Act (each a “CompanyIndemnified Person”) against any Claim to which any of them may becomesubject under the Securities Act, the Exchange Act or otherwise, insofar assuch Claim arises out of or is based upon any Violation, in each case to theextent (and only to the extent) that such Violation occurs in reliance upon andin conformity with written information furnished to the Company by such Purchaserexpressly for use in such Registration Statement. Such Purchaser will promptlyreimburse each Company Indemnified Person for any legal or other expenses(promptly as such expenses are incurred and due and payable) reasonablyincurred by them in connection with investigating or defending any such Claim. However,the indemnity agreement contained in this section does not apply toamounts paid in settlement of any Claim if such settlement is effected withoutthe prior written consent of such Purchaser, which consent will not beunreasonably withheld, and no such Purchaser will be liable under thisAgreement for the amount of any Claim that exceeds the net proceeds actually receivedby such Purchaser as a result of the sale of Registrable Securities pursuant tosuch Registration Statement. This indemnity will remain in full force andeffect regardless of any investigation made by or on behalf of a CompanyIndemnified Party and will survive the transfer of the Registrable Securitiesby the Purchasers.

###  

### **(c)****                                 **If any proceeding shall be brought or anyclaim asserted against any person entitled to indemnity hereunder (an “IndemnifiedParty”), such Indemnified Party promptly shall notify the person from whomindemnity is sought (the “Indemnifying Party”) in writing, and the IndemnifyingParty shall assume the defense thereof, including the employment of counselreasonably satisfactory to the Indemnified Party and the payment of all reasonablefees and expenses incurred in connection with defense thereof; provided,however, that the failure of any Indemnified Party to give such notice shallnot relieve the Indemnifying Party of its obligations or liabilities pursuantto this Agreement, except (and only) to the extent that such failure shall haveproximately and materially adversely prejudiced the Indemnifying Party.

###  

### **(d)****                                 **An Indemnified Party shall have the right toemploy separate counsel in any such proceeding and to participate in the defensethereof, but the fees and expenses of such counsel shall be at the expense ofsuch Indemnified Party or Indemnified Parties unless: (i) the IndemnifyingParty has agreed in writing to pay such fees and expenses; (ii) theIndemnifying Party shall have failed promptly to assume the defense of suchproceeding and to employ counsel reasonably satisfactory to such IndemnifiedParty in any such proceeding; or (iii) the named parties to any suchproceeding (including any impleaded parties) include both such IndemnifiedParty and the Indemnifying Party, and such Indemnified Party shall have beenadvised by counsel that a conflict of interest is likely to exist if the samecounsel were to represent such Indemnified Party and the Indemnifying Party (inwhich case, if such Indemnified Party notifies the Indemnifying Party inwriting that it elects to employ separate counsel at the expense of the

 

23

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### Indemnifying Party, the Indemnifying Partyshall not have the right to assume the defense thereof and such counsel shallbe at the reasonable expense of the Indemnifying Party; provided, however, thatin no event shall the Indemnifying Party be responsible for the fees andexpenses of more than one separate counsel). The Indemnifying Party shall notbe liable for any settlement of any such proceeding effected without itswritten consent, which consent shall not be unreasonably withheld. NoIndemnifying Party shall, without the prior written consent of the IndemnifiedParty, effect any settlement of any pending proceeding in respect of which anyIndemnified Party is a party, unless such settlement includes an unconditionalrelease of such Indemnified Party from all liability on Claims that are thesubject matter of such proceeding.

###  

### **(e)****                                 **Subject to the foregoing, all reasonable feesand expenses of the Indemnified Party (including fees and expenses to theextent incurred in connection with investigating or preparing to defend suchproceeding in a manner not inconsistent with this Section) shall be paid to theIndemnified Party, as incurred, within ten (10) business days ofwritten notice thereof to the Indemnifying Party, which notice shall bedelivered no more frequently than on a monthly basis (regardless of whether itis ultimately determined that an Indemnified Party is not entitled toindemnification hereunder; provided, that the Indemnifying Party may requiresuch Indemnified Party to undertake to reimburse all such fees and expenses tothe extent it is finally judicially determined that such Indemnified Party isnot entitled to indemnification hereunder).

###  

**SECTION 6.16.****                                  ****Transfer**. The rights of the Purchasers hereunder,including the right to have the Company register Registrable Securitiespursuant to this Agreement, may be assigned by the Purchasers totransferees or assignees of all or any portion of the Registrable Securities,but only if (a) the Purchaser agrees in writing with the transferee orassignee to assign such rights, and a copy of such agreement is furnished tothe Company within a reasonable time after such assignment, (b) theCompany is, within a reasonable time after such transfer or assignment,furnished with written notice of the name and address of such transferee orassignee and the securities with respect to which such registration rights arebeing transferred or assigned, (c) after such transfer or assignment, thefurther disposition of such securities by the transferee or assignee isrestricted under the Securities Act and applicable state securities laws, (d) ator before the time the Company received the written notice contemplated byclause (b) of this sentence, the transferee or assignee agrees in writingwith the Company to be bound by all of the provisions contained herein, (e) suchtransfer is made in accordance with the applicable requirements of thisAgreement, and (f) the transferee is an “accredited investor” as that termis defined in Rule 501 of Regulation D.

 

# **ARTICLE VII**

# ** **

# **MISCELLANEOUS**

# ** **

## **SECTION 7.01.****                                  ****Expenses**. Each partyhereto will pay its own expenses in connection with the transactionscontemplated hereby, whether or not such transactions will be consummated;provided, however, that the Company will pay the reasonable fees anddisbursements of each of the Purchasers’ special counsel, Paul, Hastings,Janofsky & Walker LLP and Andrews Kurth LLP, in connection with suchtransactions and with the Bridge Loan, upon delivery of a reasonably itemizedinvoice setting forth the services performed by such special counsel inconnection with such transactions. The Purchasers may deduct such feesfrom the amount to be delivered for the purchase of the Notes pursuant to Section 1.03.The Company shall also promptly pay upon demand the fees and disbursements ofeach Purchaser’s counsel incurred in connection with any amendments,modifications, supplements or waivers in connection with this Agreement or anyancillary document related thereto upon delivery of a reasonably itemizedinvoice setting forth the services performed by such special counsel in connectionwith such transactions.

 

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## **SECTION 7.02.****                                  ****Survivalof Agreements**. All covenants, agreements, representations andwarranties made in this Agreement, the Security and Pledge Agreements or anycertificate or instrument delivered to the Purchasers pursuant to or inconnection with this Agreement or the Security and Pledge Agreements willsurvive the execution and delivery of this Agreement or the Security and PledgeAgreements, the issuance, sale and delivery of the Notes and Warrants, and withrespect to the Notes, until the repayment of the Notes in full.

##  

## **SECTION 7.03.****                                  ****Brokerage**. Each partyhereto will indemnify and hold harmless the others against and in respect ofany claim for brokerage or other commissions relative to this Agreement or tothe transactions contemplated hereby, based in any way on agreements,arrangements or understandings made or claimed to have been made by such partywith any third party.

##  

## **SECTION 7.04.****                                  ****Partiesin Interest**. All representations, covenants and agreementscontained in this Agreement by or on behalf of any of the parties hereto willbind and inure to the benefit of the respective successors and assigns of theparties hereto whether so expressed or not. Without limiting the generality ofthe foregoing, all representations, covenants and agreements benefiting thePurchasers will inure to the benefit of any and all subsequent holders fromtime to time of Notes and Warrants.

##  

## **SECTION 7.05.****                                  ****Notices**. All notices,requests, consents and other communications hereunder will be in writing andwill be delivered in person, mailed by certified or registered mail, returnreceipt requested, or sent by telecopier or recognized overnight courierservice, addressed as follows:

##  

| if to the Company: |   | 19700 Fairchild Road, Suite 230      |
|--------------------|--------|-------------------------------------------|
|               |   | Irvine, California 92612                  |
|               |   | fax: (949) 955-0086                       |
|               |   | Attention: Chief Financial Officer        |
|               |   |                                      |
| with a copy to:    |   | Christopher Ivey, Esq.               |
|               |   | Stradling Yocca Carlson & Rauth  |
|               |   | 660 Newport Center Drive, Suite 1600 |
|               |   | Newport Beach, CA 92660                   |
|               |   | fax: (949) 725-4100                  |

 

Ifto any Purchaser, at the address of such Purchaser set forth in Schedule I,and

 
| If to Lloyd I. Miller, III, with a  copy to: |   | Paul N. Silverstein, Esq.                  |
|---------------------------------------------------|--------|-------------------------------------------------|
|                                              |   | Andrews Kurth LLP                               |
|                                              |   | 450 Lexington Avenue                            |
|                                              |   | New York, NY 10017                              |
|                                              |   | fax: (212) 850-2929                        |
|                                              |   |                                            |
| If to SACC Partners LP,  with a copy to:          |   | Peter J. Tennyson, Esq.                    |
|                                              |   | Paul, Hastings, Janofsky &  Walker LLP |
|                                              |   | 695 Town Center Drive,  17th Floor              |
|                                              |   | Costa Mesa, CA 92626                            |
|                                              |   | fax: (714) 668-6337                        |

 

## **SECTION 7.06.****                                  ****GoverningLaw**. This Agreement will be governed by and construed in accordance withthe substantive laws of the State of California without regard for conflicts oflaws or choice of laws principles.

 

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## **SECTION 7.07.****                                  ****EntireAgreement**. This Agreement, including the Schedules andExhibits hereto, along with the Notes, the Warrants and the Security and PledgeAgreements, constitutes the sole and entire agreement of the parties withrespect to the subject matter hereof. All Schedules and Exhibits hereto arehereby incorporated herein by reference. There are no other agreements of theparties and no party is relying on any representations of the other notexpressly set forth herein or any ancillary document related hereto or thereto.All Schedules and Exhibits hereby are hereby incorporated herein by reference.

##  

## **SECTION 7.08.****                                  ****Counterparts**. ThisAgreement may be executed in two or more counterparts, each of which willbe deemed an original, but all of which together will constitute one and thesame instrument.

##  

## **SECTION 7.09.****                                  ****Amendments**. ThisAgreement may not be amended or modified, and no provisions hereof may bewaived, without the written consent of the Company and the holders of at least662/3% of theoutstanding principal amount of the Notes.

##  

## **SECTION 7.10.****                                  ****Severability**. If anyprovision of this Agreement will be declared void or unenforceable by anyjudicial or administrative authority, the validity of any other provision andof the entire Agreement will not be affected thereby.

##  

## **SECTION 7.11.****                                  ****Titlesand Subtitles**. The titles and subtitles used in this Agreementare for convenience only and are not to be considered in construing orinterpreting any term or provision of this Agreement.

##  

## **SECTION 7.12.****                                  ****NoPublicity**. Except as expressly provided below, no party willmake, issue or release any public announcement, press release, statement oracknowledgment (collectively, “Public Announcement”) of the existence of, orreveal publicly the terms, conditions and status of, the transactionscontemplated hereby, without the prior written consent of the other party as tothe content and time of release of and the media in which such PublicAnnouncement is to be made; provided, however, that in the case of a PublicAnnouncement which a party is required by law to make, issue or release, themaking, issuing or releasing of any such Public Announcement, by a party sorequired to do so will not constitute a breach if such party has given, to theextent reasonably possible, not less than two (2) business days priornotice to the other party, and has attempted, to the extent reasonablypossible, to allow the other party to review and approve such PublicAnnouncement; provided further, however, that upon the Company’s making ofPublic Announcement regarding the existence of, or the terms, conditions andstatus of, the transactions contemplated hereby, whether pursuant to the filingof a Form 8-K or otherwise, subject to the consent of the Company, whichconsent may not be unreasonably withheld, the Purchasers may advertisethe closing of the transactions contemplated by this Agreement, and makeappropriate announcements of the financial arrangements entered into among theparties hereto, including, without limitation, announcements commonly known astombstones, in such trade publications, business journals, newspapers ofgeneral circulation and to such selected parties as the Purchasers will deemreasonably appropriate.

##  

## **SECTION 7.13.****                                  ****UsurySavings Clause**. The parties intend to comply at all times with applicableusury laws. If at any time such laws would render usurious any amounts dueunder the Notes under applicable law, then it is the parties’ express intentionthat the Company not be required to pay interest on the Notes at a rate inexcess of the maximum lawful rate, that the provisions of this Section 7.13will control over all other provisions of the Notes which may be inapparent conflict hereunder, that such excess amount will be immediatelycredited to the principal balance of the Notes (or, if the Notes have beenfully paid, refunded by the Purchaser to the Company), and the provisionsthereof will immediately reformed and the amounts thereafter decreased, so asto comply with the then applicable

 

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## usury law, but also so as topermit the recovery of the fullest amount otherwise due under the Notes. TheCompany hereby represents and warrants that its assets are sufficient to meetthe requirements for exemption from the usury laws of the State of Californiaas provided by Section 25118 of the California Corporations Code or anysuccessor statute.

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## **SECTION 7.14.****                                  ****Further Assurances.**The Company agrees to (i) executeand deliver, or cause to be executed and delivered, all such other and furtheragreements, documents and instruments and (ii) take or cause to be takenall such other and further actions as any Purchaser may reasonably requestto effectuate the intent and purposes, and carry out the terms, of thisAgreement.

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**[Signature page follows]**

 

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IN WITNESS WHEREOF, the Company and the Purchasershave executed this Note Purchase Agreement as of the day and year first abovewritten.

 
|   | **DYNTEK, INC.** |
|--------|-----------------------|
|   |                  |
|   | By:                   | /s/ Casper Zublin, Jr. |
|   | Name:                 | Casper Zublin, Jr. |
|   | Title:                | Chief Executive Officer |
|        |                       |  |  |  |

 

**PURCHASERS:**

 

**SACCPARTNERS, L.P.**

 
| By:    | /s/ Bryant Riley |   |
|--------|------------------|--------|
| Name:  | Bryant Riley     |   |
| Title: | General Partner  |   |
|        |                  |        |  |  |

 

**LLOYD I.MILLER, III**

 
| By:                              | /s/ Lloyd I. Miller, III |   |
|----------------------------------|-------------------------------|--------|
| Name: Lloyd I.  Miller, III |                          |

 

 

**TRUST A-4- LLOYD I. MILLER**

 
| By:                                   | PNC Bank,  National Association, |   |
|---------------------------------------|----------------------------------|--------|
| Its: Trustee                          |
|                                  |
| By:                                   | /s/ Lloyd I.  Miller, III   |   |
| Name: Lloyd I.  Miller, III      |
| Title:  Investment Advisor to Trustee |
|                                       |                                  |        |  |  |

 

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