**Exhibit 10.7**

 

**AGREEMENT TO AMEND THE AMENDED AND RESTATEDSECUREDCONVERTIBLE TERM NOTE AND COMMON STOCK PURCHASE WARRANT**

 

This AGREEMENT (the“Agreement”) is entered into as of October     , 2005 (the“Agreement Date”), by and among DynTek, Inc., a Delaware corporation (the“Company”) and Laurus Master Fund, Ltd. (“Laurus”).

 

**RECITALS**

 

A.                                   WHEREAS,on November 15, 2004, the Company issued that certain Amended and RestatedSecured Convertible Term Note (the “Note”) to Laurus for an aggregate principalamount of $6,649,999, pursuant to which the Company is obligated to makecertain monthly payments of principal beginning on December 1, 2005 (each an“Amortization Date”) and ending on January 30, 2007 (the “Maturity Date”), onwhich date the aggregate principal amount of the Note, together with anyaccrued and unpaid interest thereon, is required to have been paid in full;

 

B.                                     WHEREAS,in connection with the issuance of the Note, the Company issued to Laurus afive-year amended and restated warrant to purchase 1,046,150 shares of commonstock of the Company, exercisable at $0.65 per share (the “Warrant”);

 

C.                                     WHEREAS,Laurus has agreed to defer each of the first Amortization Date and MaturityDate by three (3) months, respectively;

 

D.                                    WHEREAS,pursuant to that certain Security Agreement by DynTek, Inc. in favor of LaurusMaster Fund, Ltd. dated January 30, 2004 (the “Security Agreement”) and inconnection with the Company’s Obligations (as such term is defined in theSecurity Agreement), the Company granted to Laurus a security interest insubstantially all of the Company’s assets, which are more specifically setforth in the Security Agreement as the “Collateral,” and the Company agreed tocertain covenants with respect to the Collateral set forth in Sections 3(d),3(f), 4(c) and 10 of the Security Agreement (the “Covenants”);

 

E.                                      WHEREAS,the Company proposes to enter into a Note Purchase Agreement by and between theCompany and SACC Partners, L.P. and Lloyd Miller (the “Subordinated Lenders”),pursuant to which the Company will issue Secured Promissory Notes, due December31, 2006, in an aggregate amount not to exceed $2.5 million (the “BridgeFinancing”), which Secured Promissory Notes shall be secured by a securityinterest in the collateral as set forth on Exhibit A hereto (the Collateral,”and such security interest the “Security Interest”), which Security Interestwill be junior and subordinated, at all times, to any security interest ofLaurus whether now or hereafter existing;

 

F.                                      WHEREAS,the payments to be made pursuant to the Secured Promissory Notes shall besubordinated to the Company’s Obligations to Laurus pursuant to the terms ofSection 3 hereof; and

 

G.                                     WHEREAS,to further induce Laurus to defer the first Amortization Date and Maturity Dateand to consent to the Bridge Financing, the Company has agreed to reduce theexercise price of the Warrant to $0.25 per share.

 

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**AGREEMENT**

 

NOW, THEREFORE, inconsideration of the mutual covenants hereinafter set forth and for good andvaluable consideration, receipt of which is hereby acknowledged, the partieshereby agree as follows:

 

# 1.                                       AmortizationDate and Maturity Date of Note.  Thefirst Amortization Date is hereby extended to March 1, 2006, such that monthlyprincipal payments shall begin on March 1, 2006 in the amounts set forth in theNote, and the Maturity Date is hereby extended to April 30, 2007.

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# 2.                                       Reductionin Exercise Price of the Warrant. The exercise price of the Warrant is hereby reduced to $0.25 per share.

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# 3.                                       Waiverand Consent.  Laurus hereby consentsto the consummation by the Company of the Bridge Financing and the transactionscontemplated therein, and agrees that the creation and existence of SecurityInterests contemplated by the Bridge Financing shall not constitute a breach ordefault of the Covenants; provided, however, that:

#  

## (a)                                  suchSecurity Interests remain fully subordinated to any security interest of Lauruspursuant to the terms of the Security Agreement; and

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## (b)                                 exceptas expressly otherwise provided in this Agreement or as the Senior Lender mayotherwise expressly consent in writing, any payments to the Subordinated Lenderspursuant to the terms of the Bridge Financing or otherwise shall be postponedand subordinated to the payment in full of Obligations to Laurus (as such termis defined in the Security Agreement) and any other obligations to Laurus.  Furthermore, no payments or otherdistributions whatsoever pursuant to the terms of the Bridge Financing orotherwise to the Subordinated Lenders****shallbe made, nor shall any property or assets of the Company or any of itsSubsidiaries be applied to the purchase or other acquisition or retirement ofany liability to the Subordinated Lenders pursuant to the Bridge Financing orotherwise.  Notwithstanding anything tothe contrary contained in this paragraph 3(b) or elsewhere in this Agreement, (i)the Company and its Subsidiaries may make regularly scheduled principal andinterest payments, as the case may be, to the Subordinated Lenders pursuant tothe Bridge Financing, so long as (A) no Event of Default (as defined in theNote and as defined in the Security Agreement) has occurred and is continuingat the time of any such payment and (B) the amount of such regularly scheduledprincipal payments and the rate of interest, in each case, payable to theSubordinated Lenders pursuant to the terms of the Bridge Financing is notincreased from that in effect on the date of effectiveness of this Agreementpursuant to Section 4(b) hereof; *provided,however*, that if the Event of Default occurs pursuant to the Note orthe Security Agreement, regularly scheduled principal and interest payments, asthe case may be, to the Subordinated Lenders pursuant to the Bridge Financingmay resume upon the expiration of the 180-day period following the date of suchEvent of Default **.**

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The consent set forth in thisparagraph 3 shall be applicable, and be limited, only to the Bridge Financing.

 

# 4.                                       Miscellaneous.

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## (a)                                  FurtherAssurances.  The Company agrees tocooperate fully with Laurus in connection with the transactions and obligationscontemplated by this Agreement.  Withoutlimiting

 

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the generality of theforegoing, from time to time, at the request of Laurus and without furtherconsideration, the Company will execute and deliver, or cause to be executedand delivered, such other instruments and take such other action as Laurus mayreasonably request in order to carry out the purposes of this Agreement.

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## (b)                                 Effectiveness.  This Agreement shall not be effective untilsuch time as Laurus has had the opportunity to review and comment on thedefinitive documentation of the Bridge Financing and consents to the final formthereof.

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## (c)                                  Ratification;Effect.  This Agreement shall beconstrued in connection with and as part of each of the Note and Warrant, asapplicable, and all terms, conditions, representations, warranties, covenantsand agreements set forth in each of the Note and Warrant and each otherinstrument or agreement referred to in the Note or Warrant, as applicable,except as herein amended, are hereby ratified and confirmed and shall remain infull force and effect.

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## (d)                                 Counterparts.  This Agreement may be executed in any numberof counterparts, each such counterpart constituting an original and all ofwhich when taken together shall constitute one and the same instrument.

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## (e)                                  Non-PublicInformation.  Laurus understands thatthe Company has an affirmative obligation to make prompt public disclosure ofmaterial agreements and material amendments to such agreements. The Companycovenants to disclose the material information set forth herein on Form 8-Kwithin four (4) days of the date hereof.

 

[Signature page follows]

 

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IN WITNESSWHEREOF, the parties hereto have caused this Agreement to be executed anddelivered as of the date first above written.

 
|                       |   |   | **THE COMPANY:**             |
|----------------------------|--------|--------|------------------------------|
|                       |   |   |                         |
|                       |   |   | **DynTek, Inc.**             |
|                       |   |   | ** **                   |
|                       |   |   | ** **                   |
|                       |   |   | By:                          |   |
|                       |   |   |                         |
|                       |   |   | Name:                        |   |
|                       |   |   |                         |
|                       |   |   | Title:                       |   |
|                       |   |   |                         |
|                       |   |   | ** **                   |
|                       |   |   | ** **                   |
|                       |   |   | **LAURUS:**                  |
|                       |   |   | ** **                   |
|                       |   |   | **Laurus Master Fund, Ltd.** |
|                       |   |   | ** **                   |
|                       |   |   | ** **                   |
|                       |   |   | By:                          |   |
|                       |   |   |                         |
|                       |   |   | Name:                        |   |
|                       |   |   |                         |
|                       |   |   | Title:                       |   |
|                       |   |   |                         |
|                       |   |   |                         |
|                       |   |   |                         |   |   |   |
| ACKNOWLEDGED AND AGREED:   |   |   |                         |   |
|                       |   |   |                         |   |
| **SUBORDINATED  LENDERS**: |   |   |                         |   |
|                       |   |   |                         |   |
| **SACC  Partners, L.P.**   |   |   |                         |   |
|                       |   |   |                         |   |
| By:                        |   |   |                         |   |   |
|                       |   |   |                         |   |
| Name:                      |   |   |                         |   |   |
|                       |   |   |                         |   |
| Title                      |   |   |                         |   |   |
|                       |   |   |                         |   |   |
|                       |   |   |                         |   |
|                       |   |   |                         |   |
| **Lloyd  Miller**          |   |   |                         |   |
|                            |        |        |                              |  |  |  |  |  |  |  |  |  |  |  |  |

 

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**EXHIBIT A**

 

**COLLATERAL**

 

A security interest will betaken in the following by the Subordinated Lenders, to the extent a securityinterest may be taken therein under applicable law:

 

## (a)                                  allAccounts;

##  

## (b)                                 allChattel Paper;

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## (c)                                  allDocuments;

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## (d)                                 allGeneral Intangibles (including Marks, Copyrights, Patents, payment intangibles,Proprietary Information and Trade Secrets);

##  

## (e)                                  allGoods (including Inventory, Equipment and Fixtures);

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## (f)                                    allInstruments;

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## (g)                                 allInvestment Property, including (i) all shares of the capital stock ormembership interests of each subsidiary owned or held by each Debtor, whethernow owned or hereafter formed or acquired (those shares and membershipinterests being listed and described on Schedule A attached hereto), andall substitutions and additions to such shares (herein, the “PledgedSecurities”), (ii) all dividends, distributions, and sums distributable orpayable from, upon or in respect of the Pledged Securities, and (iii) allother rights and privileges incident to the Pledged Securities (all of theforegoing being hereinafter referred to collectively as the “StockCollateral”);

##  

## (h)                                 allDeposit Accounts of such Debtor, including all blocked accounts, concentrationaccounts, disbursement accounts, and all other bank  accounts and all deposits therein;

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## (i)                                     allmoney, cash or cash equivalents of such Debtor;

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## (j)                                     allSupporting Obligations and Letter-of-Credit Rights of such Debtor;

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## (k)                                  tothe extent not otherwise included, all Proceeds, tort claims, insurance claimsand other rights to payments not otherwise included in the foregoing andproducts of the foregoing and all accessions to, substitutions and replacementsfor, and rents and profits of, each of the foregoing.

##  

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**SCHEDULE A**

 

1.                                       Subsidiariesof DynTek, Inc.:

 
| **NAME OF  SUBSIDIARY**                    | ** ** | **STATE OF  INCORPORATION** |
|--------------------------------------------|------------|-----------------------------|
| BugSolver.Com, Inc. (*)                    |       | Delaware                    |
| DynTek Services, Inc. (*)                  |       | Delaware                    |
| TekInsight e-Government Services, Inc. (*) |       | Delaware                    |
| TekInsight Research, Inc. (*)              |       | New York                    |

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(*)                                 TheCompany owns 100% of the issued and outstanding capital stock of each of thesubsidiaries listed above.

 

2.                                       TheCompany owns seventeen percent (17%) of the outstanding common stock ofTekInsight, LLC, a Delaware limited liability company.

 

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