Exhibit 10.7


 


AGREEMENT TO AMEND THE AMENDED AND RESTATED
SECURED

CONVERTIBLE 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 Restated
Secured Convertible Term Note (the “Note”) to Laurus for an aggregate principal
amount of $6,649,999, pursuant to which the Company is obligated to make
certain monthly payments of principal beginning on December 1, 2005 (each an
“Amortization Date”) and ending on January 30, 2007 (the “Maturity Date”), on
which date the aggregate principal amount of the Note, together with any
accrued 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 a
five-year amended and restated warrant to purchase 1,046,150 shares of common
stock 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 Maturity
Date by three (3) months, respectively;


 


D.                                    WHEREAS,
pursuant to that certain Security Agreement by DynTek, Inc. in favor of Laurus
Master Fund, Ltd. dated January 30, 2004 (the “Security Agreement”) and in
connection with the Company’s Obligations (as such term is defined in the
Security Agreement), the Company granted to Laurus a security interest in
substantially all of the Company’s assets, which are more specifically set
forth in the Security Agreement as the “Collateral,” and the Company agreed to
certain 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 the
Company and SACC Partners, L.P. and Lloyd Miller (the “Subordinated Lenders”),
pursuant to which the Company will issue Secured Promissory Notes, due December
31, 2006, in an aggregate amount not to exceed $2.5 million (the “Bridge
Financing”), which Secured Promissory Notes shall be secured by a security
interest in the collateral as set forth on Exhibit A hereto (the Collateral,”
and such security interest the “Security Interest”), which Security Interest
will be junior and subordinated, at all times, to any security interest of
Laurus whether now or hereafter existing;


 


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


 


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


 





















 


AGREEMENT


 


NOW, THEREFORE, in
consideration of the mutual covenants hereinafter set forth and for good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereby agree as follows:


 


1.                                       Amortization
Date and Maturity Date of Note.  The
first Amortization Date is hereby extended to March 1, 2006, such that monthly
principal payments shall begin on March 1, 2006 in the amounts set forth in the
Note, and the Maturity Date is hereby extended to April 30, 2007.


 


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


 


3.                                       Waiver
and Consent.  Laurus hereby consents
to the consummation by the Company of the Bridge Financing and the transactions
contemplated therein, and agrees that the creation and existence of Security
Interests contemplated by the Bridge Financing shall not constitute a breach or
default of the Covenants; provided, however, that:


 


(a)                                  such
Security Interests remain fully subordinated to any security interest of Laurus
pursuant to the terms of the Security Agreement; and


 


(b)                                 except
as expressly otherwise provided in this Agreement or as the Senior Lender may
otherwise expressly consent in writing, any payments to the Subordinated Lenders
pursuant to the terms of the Bridge Financing or otherwise shall be postponed
and subordinated to the payment in full of Obligations to Laurus (as such term
is defined in the Security Agreement) and any other obligations to Laurus.  Furthermore, no payments or other
distributions whatsoever pursuant to the terms of the Bridge Financing or
otherwise to the Subordinated Lenders shall
be made, nor shall any property or assets of the Company or any of its
Subsidiaries be applied to the purchase or other acquisition or retirement of
any liability to the Subordinated Lenders pursuant to the Bridge Financing or
otherwise.  Notwithstanding anything to
the contrary contained in this paragraph 3(b) or elsewhere in this Agreement, (i)
the Company and its Subsidiaries may make regularly scheduled principal and
interest payments, as the case may be, to the Subordinated Lenders pursuant to
the Bridge Financing, so long as (A) no Event of Default (as defined in the
Note and as defined in the Security Agreement) has occurred and is continuing
at the time of any such payment and (B) the amount of such regularly scheduled
principal payments and the rate of interest, in each case, payable to the
Subordinated Lenders pursuant to the terms of the Bridge Financing is not
increased from that in effect on the date of effectiveness of this Agreement
pursuant to Section 4(b) hereof; provided,
however, that if the Event of Default occurs pursuant to the Note or
the Security Agreement, regularly scheduled principal and interest payments, as
the case may be, to the Subordinated Lenders pursuant to the Bridge Financing
may resume upon the expiration of the 180-day period following the date of such
Event of Default .


 


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


 


4.                                       Miscellaneous.


 


(a)                                  Further
Assurances.  The Company agrees to
cooperate fully with Laurus in connection with the transactions and obligations
contemplated by this Agreement.  Without
limiting


 


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the generality of the
foregoing, from time to time, at the request of Laurus and without further
consideration, the Company will execute and deliver, or cause to be executed
and delivered, such other instruments and take such other action as Laurus may
reasonably request in order to carry out the purposes of this Agreement.


 


(b)                                 Effectiveness.  This Agreement shall not be effective until
such time as Laurus has had the opportunity to review and comment on the
definitive documentation of the Bridge Financing and consents to the final form
thereof.


 


(c)                                  Ratification;
Effect.  This Agreement shall be
construed in connection with and as part of each of the Note and Warrant, as
applicable, and all terms, conditions, representations, warranties, covenants
and agreements set forth in each of the Note and Warrant and each other
instrument or agreement referred to in the Note or Warrant, as applicable,
except as herein amended, are hereby ratified and confirmed and shall remain in
full force and effect.


 


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


 


(e)                                  Non-Public
Information.  Laurus understands that
the Company has an affirmative obligation to make prompt public disclosure of
material agreements and material amendments to such agreements. The Company
covenants to disclose the material information set forth herein on Form 8-K
within four (4) days of the date hereof.


 


[Signature page follows]


 


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IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed and
delivered 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

  	
   

  	
   

  	
   

  	
   

  
																



 





















 


EXHIBIT A


 


COLLATERAL


 


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


 


(a)                                  all
Accounts;


 


(b)                                 all
Chattel Paper;


 


(c)                                  all
Documents;


 


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


 


(e)                                  all
Goods (including Inventory, Equipment and Fixtures);


 


(f)                                    all
Instruments;


 


(g)                                 all
Investment Property, including (i) all shares of the capital stock or
membership interests of each subsidiary owned or held by each Debtor, whether
now owned or hereafter formed or acquired (those shares and membership
interests being listed and described on Schedule A attached hereto), and
all substitutions and additions to such shares (herein, the “Pledged
Securities”), (ii) all dividends, distributions, and sums distributable or
payable from, upon or in respect of the Pledged Securities, and (iii) all
other rights and privileges incident to the Pledged Securities (all of the
foregoing being hereinafter referred to collectively as the “Stock
Collateral”);


 


(h)                                 all
Deposit Accounts of such Debtor, including all blocked accounts, concentration
accounts, disbursement accounts, and all other bank  accounts and all deposits therein;


 


(i)                                     all
money, cash or cash equivalents of such Debtor;


 


(j)                                     all
Supporting Obligations and Letter-of-Credit Rights of such Debtor;


 


(k)                                  to
the extent not otherwise included, all Proceeds, tort claims, insurance claims
and other rights to payments not otherwise included in the foregoing and
products of the foregoing and all accessions to, substitutions and replacements
for, and rents and profits of, each of the foregoing.


 


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SCHEDULE A


 


1.                                       Subsidiaries
of 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

  











(*)                                 The
Company owns 100% of the issued and outstanding capital stock of each of the
subsidiaries listed above.


 


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


 


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