Document:

EXHIBIT 10.7

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (this “Agreement”),
dated as of March 8, 2006, is made by and among DynTek, Inc., a
Delaware corporation, with headquarters located at 19700 Fairchild Road, Suite 230,
Irvine, California 92612 (the “Company”), and the investors named on the
signature pages hereto, together with their permitted transferees (each,
an “Investor” and collectively, the “Investors”).

 

RECITALS:

 

A.            The
Company and the Investors are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section 4(2) of
the Securities Act and Rule 506 under Regulation D.

 

B.            The
Investors desire, upon the terms and conditions stated in this Agreement, to
purchase in the aggregate up to 225,000,000 shares of the Company’s Common
Stock (the “Common Shares”) and warrants, in the form of Exhibit A
hereto, to purchase such number of shares of the Company’s Common Stock (the “Warrant
Shares”) equal to twenty percent (20%) of the Common Shares, rounded down to
the nearest whole share (the “Warrants,” and collectively with the Common
Shares, the “Securities”), for an aggregate purchase price of up to Four
Million Five Hundred Thousand Dollars ($4,500,000).  The purchase price per share for each Common
Share and corresponding Warrant is $0.02.

 

C.            Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement under which the
Company has agreed to provide certain registration rights under the Securities
Act, the rules and regulations promulgated thereunder and applicable state
securities laws.

 

D.            The
capitalized terms used herein and not otherwise defined have the meanings given
them in Article IX hereof.

 

In consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Investors hereby agree as follows:

 

ARTICLE I

PURCHASE AND SALE OF SECURITIES

 

1.1           Purchase
and Sale of Securities.  At the
Closing, subject to the terms of this Agreement and the satisfaction or waiver
of the conditions set forth in Articles VI and VII hereof, the Company will
issue and sell to each Investor, and each Investor will (on a several and not a
joint basis) purchase from the Company, the number of Securities set forth
beneath such Investor’s name on the signature pages hereof.

 

1.2           Closing.

 

(a)           The
separate purchases and sales of an aggregate of up to 225,000,000 Shares, for
an aggregate purchase price of up to $4,500,000, shall take place at the Closing
to be held at 10:00 a.m. local time at the offices of Stradling Yocca
Carlson & Rauth, 660 Newport Center

 

 

Drive, Suite 1600, Newport Beach, CA  92660 on March 8, 2006 (the “First Closing
Date”), or at such other time or place as the parties mutually agree.  At or prior to the First Closing Date, each
Investor will pay the purchase price for the number of Securities set forth
beneath its name on the signature pages hereof, by wire transfer of
immediately available funds in accordance with the wire instructions set forth
on Exhibit B hereto.  The
Company shall deliver to each Investor the deliverables identified in Article VII
on the First Closing Date and certificates representing the Common Shares so
purchased by such Investor within five (5) business days following the First
Closing Date against delivery of the purchase price.

 

(b)           After the First
Closing Date, the Company may sell, on the same terms and conditions as those
contained in this Agreement, an aggregate of up to 225,000,000 Shares less the
number of Shares sold on the First Closing Date, for an aggregate purchase
price of up to $4,500,000 less the aggregate purchase price received on the
First Closing Date, to one or more Investors (the “Additional Investors”),
provided that (i) such subsequent sale is consummated prior to March 31,
2006, unless extended by the Company for a period of up to ninety (90) days
from such date, without notice to any Investors (the “Second Closing Date”),
and (ii) each Investor becomes a party to this Agreement and the Registration
Rights Agreement in the form attached hereto as Exhibit C.  At or prior to the Second Closing Date, each
Investor will pay the purchase price for the number of Securities set forth
beneath its name on the signature pages hereof, by wire transfer of
immediately available funds in accordance with the wire instructions set forth
on Exhibit B hereto.  The
Company shall deliver to each Additional Investor the deliverables identified
in Article VII on the Second Closing Date and certificates representing
the Common Shares so purchased by such Additional Investor within five (5) business
days following the Second Closing Date against delivery of the purchase price.

 

ARTICLE II

INVESTOR’S REPRESENTATIONS AND WARRANTIES

 

Each Investor represents and warrants to the Company,
severally and solely with respect to itself and its purchase hereunder and not
with respect to any other Investor, that:

 

2.1           Investment
Purpose.  The Investor is purchasing
the Securities for its own account and not with a present view toward the
public sale or distribution thereof, except pursuant to sales registered or
exempted from registration under the Securities Act; provided, however, that by
making the representation herein, the Investor does not agree to hold any of
the Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption from registration under the Securities
Act.

 

2.2           Accredited
Investor Status.  The Investor is an “accredited
investor” as defined in Rule 501(a) of Regulation D.  The Investor has delivered an Investor Questionnaire
in the form of Exhibit D to the Company.

 

2.3           Reliance
on Exemptions.  The Investor
understands that the Securities are being offered and sold to it in reliance
upon specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Investor’s compliance with, the representations,
warranties, agreements, 

 

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acknowledgments and understandings of the Investor set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Investor to acquire the Securities.

 

2.4           Information.  The Investor and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company, and materials relating to the offer and sale of the
Securities, that have been requested by the Investor or its advisors, if
any.  The Investor and its advisors, if
any, have been afforded the opportunity to ask questions of the Company.  Neither such inquiries nor any other due
diligence investigation conducted by Investor or any of its advisors or
representatives modify, amend or affect the Investor’s right to rely on the
Company’s representations and warranties contained in Article III
below.  The Investor acknowledges and
understands that its investment in the Securities involves a significant degree
of risk.

 

2.5           Governmental
Review.  The Investor understands
that no United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or endorsement
of the Securities or an investment therein.

 

2.6           Transfer
or Resale.  The Investor understands
that:

 

(a)           except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any applicable state
securities laws and, consequently, the Investor may have to bear the risk of
owning the Securities for an indefinite period of time because the Securities
may not be transferred unless (i) the resale of the Securities is
registered pursuant to an effective registration statement under the Securities
Act; (ii) the Investor has delivered to the Company an opinion of counsel
(in form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Securities to be sold or transferred may
be sold or transferred pursuant to an exemption from such registration; (iii) the
Securities are sold or transferred pursuant to Rule 144; or (iv) the
Securities are sold or transferred to an affiliate (as defined in Rule 144)
of the Investor;

 

(b)           any sale
of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require compliance
with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and

 

(c)           except as
set forth in the Registration Rights Agreement, neither the Company nor any
other person is under any obligation to register the Securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.

 

2.7           Legends.  The Investor understands that until (a) the
Securities may be sold by the Investor under Rule 144(k) or (b) such
time as the resale of the Securities has been registered under the Securities
Act as contemplated by the Registration Rights Agreement, the certificates
representing the Securities will bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of the
certificates for such Securities):

 

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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.  THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.

 

The legend set forth above will be removed and the
Company will issue a certificate without the legend to the holder of any
certificate upon which it is stamped, in accordance with the terms of Article V
hereof.

 

2.8           Authorization;
Enforcement.  This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of the Investor and are valid and binding agreements of
the Investor enforceable in accordance with their terms, subject to the effect
of any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and the application of general
principles of equity.

 

2.9           Residency.  The Investor is a resident of (or, if an
entity, has its principal place of business in) the jurisdiction set forth
immediately below such Investor’s name on the signature pages hereto.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as otherwise set forth in the Company SEC
Filings, or in a schedule of exceptions delivered by the Company to the
Investors simultaneously with the execution of this Agreement (the “Schedule of
Exceptions”), which identifies exceptions by specific Section references
(provided that any information set forth in any one section of the Schedule of
Exceptions shall be deemed to apply to each other applicable Section or
subsection thereof if its relevance to the information called for in such Section or
subsection is reasonably apparent), the Company hereby represents and
warrants to the Investors that:

 

3.1           Organization
and Qualification.  Each of the
Company and its Significant Subsidiary is duly incorporated, validly existing
and in good standing under the laws of the jurisdiction in which it is
incorporated, with full power and authority (corporate and other) to own,
lease, use and operate its properties and to carry on its business as and where
now owned, leased, used, operated and conducted.  Each of the Company and its Significant
Subsidiary is duly qualified to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.  Each of the Company and its Significant
Subsidiary have taken all necessary action to qualify to do business and be in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified or in good standing would not have a Material Adverse Effect.

 

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3.2           Authorization;
Enforcement.  (a) The Company
has all requisite corporate power and authority to enter into and to perform
its obligations under this Agreement, the Registration Rights Agreement and the
Warrants, to consummate the transactions contemplated hereby and thereby and to
issue the Common Shares, the Warrants and the Warrant Shares issuable upon
exercise of the Warrants in accordance with the terms hereof and thereof; (b) the
execution, delivery and performance of this Agreement, the Registration Rights
Agreement and the Warrants by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation the
issuance of the Common Shares, the Warrants and the Warrant Shares issuable
upon exercise of the Warrants) have been duly authorized by the Company’s Board
of Directors and no further consent or authorization of the Company, its Board
or Directors, or its stockholders is required; (c) this Agreement, the
Registration Rights Agreement and the Warrants have been duly executed by the
Company; and (d) each of this Agreement, the Registration Rights Agreement
and the Warrants constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject
to the effect of any applicable bankruptcy, insolvency, reorganization, or
moratorium or similar laws affecting the rights of creditors generally and the
application of general principles of equity.

 

3.3           Capitalization.  As of the date hereof, the authorized capital
of the Company consists of 450,000,000 shares of Common Stock, $.0001 par value
per share, and 10,000,000 shares of preferred stock, $.0001 par value per share
(“Preferred Stock”).  As of February 15,
2006, there were 81,164,636 shares of Common Stock issued and outstanding and
no shares of Preferred Stock issued and outstanding.  Except as disclosed in Section 3.3 of
the Schedule of Exceptions or in the Company SEC Filings, there are no
options, warrants and convertible securities of the Company, and any other
rights to acquire securities of the Company. 
All outstanding securities of the Company are validly issued, fully paid
and nonassessable.  No stockholder of the
Company is entitled to any preemptive rights with respect to the purchase of or
sale of any securities by the Company.

 

3.4           Issuance
of Securities.  The Securities are
duly authorized and, upon issuance in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, free from all
taxes, liens, claims, encumbrances and charges with respect to the issue
thereof, will not be subject to preemptive rights or other similar rights of
stockholders of the Company, and will not impose personal liability on the
holders thereof.  The Company has
reserved a sufficient number of shares of Common Stock for issuance upon
exercise of the Warrants, and upon payment of the exercise price and exercise
of the Warrants in accordance with its terms, the Warrant Shares will be
validly issued, fully paid and non-assessable, free from all taxes, liens,
claims, encumbrances and charges with respect to the issue thereof, will not be
subject to preemptive rights or other similar rights of stockholders of the
Company and will not impose personal liability on the holders thereof.

 

3.5           No
Conflicts; No Violation.

 

(a)           The
execution, delivery and performance of this Agreement, the Registration Rights
Agreement and the Warrants by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Common Shares, the Warrants and the Warrant
Shares issuable upon exercise of the Warrants) will not (i) conflict with
or result in a violation of any provision of its Second Amended and Restated Certificate
of Incorporation (the “Company Certificate”) or bylaws, as amended (the “Bylaws”)
or (ii) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse of time or
both could become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture, patent, 

 

5

 

patent license, or
instrument to which the Company or any Subsidiary is a party, (iii) result
in a violation of any law, rule, regulation, order, judgment or decree
(including U.S. federal and state securities laws and the rules and
regulations of any self-regulatory organizations to which the Company or any
Subsidiary or any of the securities of the Company or any Subsidiary are
subject) applicable to the Company or any Subsidiary or by which any property
or asset of the Company or its subsidiaries is bound or affected, or (iv) result
in the imposition of a Lien on any assets of the Company or any of its
Subsidiaries, except with respect to (ii), (iii) and (iv) above, for
such conflicts, breaches, defaults, terminations, amendments, accelerations,
cancellations, violations and impositions as would not, individually or in the
aggregate, have a Material Adverse Effect.

 

(b)           The
Company is not in violation of the Company Certificate or Bylaws, and no
Subsidiary of the Company is in violation of its organizational documents.  Neither the Company nor any Subsidiary is in
default (and no event has occurred which with notice or lapse of time or both
could put the Company in default) under any agreement, indenture or instrument
to which the Company or Subsidiary is a party or by which any property or
assets of the Company or its Subsidiaries are bound or affected, except for
defaults as would not, individually or in the aggregate, have a Material
Adverse Effect.

 

(c)           Neither
the Company nor any Subsidiary is conducting its business in violation of any
law, ordinance or regulation of any governmental entity, the failure to comply
with which would, individually or in the aggregate, have a Material Adverse
Effect.

 

(d)           Except as
specifically contemplated by this Agreement and as required under the
Securities Act and any applicable state securities laws or any listing
agreement with any securities exchange or automated quotation system, neither
the Company nor any Subsidiary is required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for the Company to
execute, deliver or perform any of its obligations under this Agreement, the
Registration Rights Agreement or the Warrants, in each case in accordance with
the terms hereof or thereof, or to issue and sell the Securities in accordance
with the terms hereof.  All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof or are not required to be made or obtained until
after the date hereof.

 

3.6           SEC
Filings, Other Filings and Regulatory Compliance.  The Company has timely filed all registration
statements, prospectuses, forms, reports, definitive proxy statements,
schedules and documents required to be filed by it under the Securities Act or
the Exchange Act, as the case may be, since January 1, 2003 (collectively,
the “Company SEC Filings”).  None of the
Company’s Subsidiaries is required to file periodic reports with the SEC
pursuant to the Exchange Act.  Each
Company SEC Filing (i) as of the time it was filed, complied in all
material respects with the requirements of the Securities Act, the Exchange Act
and the Sarbanes-Oxley Act of 2002, as the case may be, and (ii) did not,
at the time it was filed (or if subsequently amended or superseded by a Company
SEC Filing made on or prior to the date of this Agreement, then on the date of
such subsequent filing), contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.  The
Company has taken, or will have taken prior to the Closing, all necessary
actions to maintain eligibility of its Common Stock for trading on the OTC
Bulletin Board under all currently effective inclusion requirements.  Each balance sheet included in the Company
SEC Filings (including any related notes and schedules)

 

6

 

fairly presents in all material respects the consolidated financial
position of the Company as of its date, and each of the other financial
statements included in the Company SEC Filings (including any related notes and
schedules) fairly presents in all material respects the consolidated results of
operations of the Company for the periods or as of the dates therein set forth
in accordance with GAAP consistently applied during the periods involved (except
as may be indicated in the notes thereto or, in the case of interim
consolidated financial statements, where information and footnotes contained in
such financial statements are not required to be in compliance with GAAP, and
normal year-end audit adjustments). Such financial statements included in the Company
SEC Filings were, at that time they were filed, consistent with the books and
records of the Company in all material respects and complied as to form in all
material respects with then applicable accounting requirements and with the rules and
regulations of the SEC with respect thereto. 
The Company keeps accounting records in accordance with GAAP, and normal
year end audit adjustments in which all material assets and liabilities, and
all material transactions, including off-balance sheet transactions, of the
Company are recorded in material conformity with applicable accounting
principles.

 

3.7           Material
Changes.  Since June 30, 2005,
except as specifically contemplated by, or as otherwise disclosed in the
Company SEC Filings, each of the Company and its Subsidiaries has conducted its
business in, and has not engaged in any material transaction other than
according to, the usual and ordinary course consistent with past practice and,
since such date, there has not been any Material Adverse Effect with respect to
the Company.

 

3.8           Litigation.  There is no action, suit, proceeding or
investigation pending (each a “Proceeding” and collectively, the “Proceedings”),
or to Company’s knowledge, threatened Proceedings against or affecting the
Company or any of its Subsidiaries, their respective assets or businesses, the
outcome of which is expected to have, individually or in the aggregate, a
Material Adverse Effect with respect to the Company.  There are no pending, or to the Company’s knowledge,
threatened Proceedings against the Company or any if its Subsidiaries that, as
of the date hereof, challenges the validity or propriety, or seeks to prevent
the consummation of the transactions contemplated hereby.

 

3.9           Rights of Registration,
Voting Rights, and Anti-Dilution. 
Except as contemplated in this Agreement, the Registration Rights
Agreement, Section 3.9 of the Schedule of Exceptions and for
registration rights for which the Company has filed one or more registration
statements that are currently effective, the Company
has not granted or agreed to grant any registration rights, including piggyback
rights, to any person and, to the Company’s knowledge, no stockholder of the
Company has entered into any agreements with respect to the voting of capital
shares of the Company.  The issuance of
the Shares does not constitute an anti-dilution event for any existing security
holders of the Company, pursuant to which such security holders would be entitled
to additional securities or a reduction in the applicable conversion price or
exercise price of any securities.

 

3.10         Intellectual
Property Rights.  The Company owns or
possesses the licenses or rights to use all patents, patent applications, patent
rights, inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names and copyrights
necessary to enable it to conduct its business as now operated (the “Intellectual
Property”).  There are no material
outstanding options, licenses or agreements relating to the Intellectual
Property, nor is the Company bound by or a party to any material options,
licenses or agreements relating to the patents, patent applications, patent
rights, inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names or copyrights of any
other person or entity.  There is no 

 

 

7

 

claim or action or proceeding pending or, to the Company’s
knowledge, threatened that challenges the right of the Company with respect to
any Intellectual Property.  To the
knowledge of the Company, the Company’s Intellectual Property does not infringe
any intellectual property rights of any other person which, if the subject of
an unfavorable decision, ruling or finding would have a Material Adverse
Effect.

 

3.11         Tax
Status.  The Company has timely made
or filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has timely paid all taxes and other governmental assessments and
charges, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith, and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply.  To the knowledge of
the Company, there are no unpaid taxes claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.  The Company has not
executed a waiver with respect to the statute of limitations relating to the
assessment or collection of any foreign, federal, state or local tax.  None of the Company’s tax returns is
presently being audited by any taxing authority.

 

3.12         Environmental
Laws.  The Company (i) is in
compliance with all applicable foreign federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) has received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct its business and (iii) is in compliance with all terms and
conditions of any such permit, license or approval where, in each of the three
foregoing clauses, the failure to so comply would have, individually or in the
aggregate, a Material Adverse Effect.

 

3.13         No
Brokers.  The Company has taken no
action which would give rise to any claim by any person for brokerage
commissions, finder’s fees or similar payments relating to this Agreement or
the transactions contemplated hereby, except for dealings with Network 1
Financial Services, Inc., whose commissions and fees will be paid for by
the Company.

 

3.14         Insurance.  The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company reasonably believes to be prudent and
customary in the businesses in which the Company is engaged.

 

3.15         Employment
Matters.  The Company is in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not have a Material Adverse Effect.  The
Company is not bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has
requested or, to the Company’s knowledge, has sought to represent any of the
employees, representatives or agents of the Company.  There is no strike or other labor dispute
involving the Company pending, or to the Company’s knowledge, threatened nor is
the Company aware of any labor organization activity involving its
employees.  The Company is not aware that
any officer or key employee, or that any group of officers or key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any of the foregoing.

 

 

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3.16         Employee
Benefit Plans.  Except as set forth
in the Company SEC Filings, there are no employee, profit sharing, stock
option, stock purchase, pension, retirement, bonus, severance or deferred
compensation plans or arrangements or any other welfare or benefit plans or any
unfunded liabilities in respect of any such plans or arrangements of the
Company, as well as all employment agreements, whether written or oral, with
any person, and any contracts with any labor unions.

 

3.17         Investment
Company Status.  The Company is not
and upon consummation of the sale of the Securities will not be an “investment
company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company Act of 1940, as
amended.

 

3.18         Subsidiaries.  Except as set forth in the Company SEC
Filings, the Company does not presently own or control, directly or indirectly,
any interest in any other corporation, association, joint venture, partnership
or other business entity and the Company is not a direct or indirect
participant in any joint venture or partnership.  Except for Dyntek Services, Inc., the
Company has no “significant subsidiary,” as that term is defined in Rule 1-02(w)
of Regulation S-X under the Securities Act (“Significant Subsidiary”).

 

3.19         No
Conflict of Interest.  Except as set
forth in the Company SEC Filings: (i) the Company is not indebted,
directly or indirectly, to any of its officers or directors or to their
respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary
course of business or relocation expenses of employees, and (ii) none of
the Company’s officers, directors or employees, or any members of their
immediate families, are directly, or indirectly, indebted to the Company or, to
the best of the Company’s knowledge, have any direct or indirect ownership
interest in any entity with which the Company is affiliated or with which the
Company has a business relationship, or any entity which competes with the
Company, except that officers, directors, employees and/or stockholders of the
Company may own stock in (but not exceeding five percent (5%) of the
outstanding capital stock of) any publicly traded company that may compete with
the Company.  To the best of the Company’s
knowledge, none of the Company’s officers, directors or employees or any
members of their immediate families are, directly or indirectly, interested in
any material contract with the Company. 
The Company is not a guarantor or indemnitor of any indebtedness of any
other person or entity.

 

3.20         No
Manipulation of Stock.  The Company
has not taken and will not, in violation of applicable law, take, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Shares.

 

3.21         Representations
Complete.  No representation or
warranty made by the Company in this Agreement contains any untrue statement of
a material fact or omits to state a material fact that is necessary to make the
representation or warranty made, in the light of the circumstances under which
it was made, not false or misleading in any material respect.

 

ARTICLE IV

COVENANTS

 

4.1           Best
Efforts.  Each party will use its
best efforts to satisfy in a timely fashion each of the conditions to be
satisfied by it under Articles VI and VII of this Agreement.

 

 

9

 

4.2           Form D;
Blue Sky Laws.  The Company will
timely file a Notice of Sale of Securities on Form D with respect to the
Securities, as required under Regulation D. 
The Company will take such action as it reasonably determines to be
necessary to qualify the Securities for sale to the Investors under this
Agreement under applicable securities (or “blue sky”) laws of the states of the
United States (or to obtain an exemption from such qualification).

 

4.3           Timely
SEC Filings.  Throughout the
Registration Period (as defined in the Registration Rights Agreement), the
Company will timely file all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under the reporting
requirements of the Exchange Act, and the Company will not terminate its status
as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.

 

4.4           Expenses.  The Company is liable for, and will pay, expenses
incurred by it and one special counsel to the Investors in connection with the
negotiation, preparation, execution and delivery of this Agreement and the
other agreements to be executed in connection herewith, including, without
limitation, attorneys’ and consultants’ fees and expenses; provided, however,
that the Company is only obligated to pay expenses incurred by special counsel
to the Investors upon receipt of a reasonably itemized invoice setting forth
the services performed by such special counsel in connection with the transactions
contemplated hereby.

 

4.5           Financial
Information.  As long as an Investor
owns any of the Securities or Warrant Shares, the financial statements of the
Company will be prepared in accordance with United States generally accepted
accounting principles consistently applied throughout the periods indicated
(except as may be indicated in the notes thereto or, in the case of interim
consolidated financial statements, where information and footnotes contained in
such financial statements are not required to be in compliance with GAAP), and
will fairly present in all material respects the consolidated financial
position of the Company and results of its operations and cash flows as of, and
for the periods covered by, such financial statements.

 

4.6           Notification
of Certain Matters.  Prior to the
Closing, each party hereto shall give prompt notice to the other party of the
occurrence, or non-occurrence, of any event which would be likely to cause any
representation and warranty herein to be untrue or inaccurate, or any covenant,
condition or agreement herein not to be complied with or satisfied.

 

4.7           Compliance
with Law.  As long as an Investor
owns any of the Securities or Warrant Shares, the Company will conduct its
business in compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations, the failure to comply, individually or in the aggregate, with which
would have a Material Adverse Effect.

 

4.8           Sales
by Investors.  Each Investor will
sell any Securities sold by it in compliance with applicable prospectus
delivery requirements, if any, or otherwise in compliance with the requirements
for an exemption from registration under the Securities Act and the rules and
regulations promulgated thereunder.  No
Investor will make any sale, transfer or other disposition of the Securities in
violation of federal or state securities laws.

 

 

10

 

ARTICLE V

TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS

 

5.1           Issuance
of Certificates.  The Company will,
or will instruct its transfer agent to, issue certificates, registered in the
name of each Investor or its nominee, for the Securities and, promptly upon
exercise of any Warrants, the applicable Warrant Shares.  All such certificates will bear the
restrictive legend described in Section 2.7, except as otherwise specified
in this Article V.  The Company will
not give to its transfer agent any instruction other than as described in this Article V
and stop transfer instructions to give effect to Section 2.7 hereof (prior
to registration of the Securities under the Securities Act).  Nothing in this Section will affect in
any way each Investor’s obligations to comply with all applicable prospectus
delivery requirements, if any, upon resale of the Common Shares and/or Warrant
Shares.

 

5.2           Unrestricted
Securities.  If, unless otherwise
required by applicable state securities laws, (a) the Securities or
Warrant Shares represented by a certificate have been registered under an
effective registration statement filed under the Securities Act, (b) a
holder of Securities or Warrant Shares provides the Company and its transfer
agent with an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Securities or Warrant Shares may be made without
registration under the Securities Act and such sale either has occurred or may
occur without restriction on the manner of such sale or transfer, (c) such
holder provides the Company and its transfer agent with reasonable assurances
that such Securities or Warrant Shares can be sold under Rule 144, or (d) the
Securities or Warrant Shares represented by a certificate can be sold without
restriction as to the number of securities sold under Rule 144(k), the
Company will permit the transfer of the Securities or Warrant Shares, and the
Company’s transfer agent will issue one or more certificates, free from any
restrictive legend, in such name and in such denominations as specified by such
holder.  Notwithstanding anything herein
to the contrary and subject to applicable securities laws, the Securities or
Warrant Shares may be pledged as collateral in connection with a bona fide
margin account or other lending arrangement; provided that such pledge will not
alter the provisions of this Article V with respect to the removal of
restrictive legends.

 

ARTICLE VI

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL

 

The obligation of the Company to issue and sell the
Securities to each Investor at the Closing is subject to the satisfaction by
such Investor, on or before the First Closing Date or the Second Closing Date,
as the case may be, of each of the following conditions.  These conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole discretion:

 

6.1           Execution
of Documents.  The Investor will have
executed this Agreement, the Investor Questionnaire, the Registration Rights
Agreement and the Investor’s Warrant and will have delivered those agreements
to the Company.

 

6.2           Purchase
Price.  The Investor will have
delivered the purchase price for the Securities to the Company in accordance
with this Agreement.

 

6.3           Representations
and Warranties.  The representations
and warranties of the Investor must be true and correct in all material
respects as of the First Closing Date and the Second Closing 

 

11

 

Date, as applicable, as though made at that time (except for
representations and warranties that speak as of a specific date, which
representations and warranties must be correct as of such date), and the
Investor will have performed and complied in all material respects with the
covenants and conditions required by this Agreement to be performed or complied
with by the Investor at or prior to the Closing.

 

6.4           No
Prohibition.  No statute, rule,
regulation, executive order, decree, ruling or injunction will have been
enacted, entered, promulgated or endorsed by or in any court or governmental
authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation
of any of the transactions contemplated by this Agreement or the Registration
Rights Agreement or the Warrants.

 

ARTICLE VII

CONDITIONS TO THE INVESTOR’S OBLIGATION TO PURCHASE

 

The obligation of each Investor hereunder to purchase
the Securities from the Company at the Closing is subject to the satisfaction,
on or before the First Closing Date or the Second Closing Date, as the case may
be, of each of the following conditions. 
These conditions are for each Investor’s respective benefit and may be
waived by any Investor at any time in its sole discretion:

 

7.1           Execution
of Documents.  The Company will have
executed this Agreement, the Registration Rights Agreement and the Warrants and
will have delivered those Agreements to the Investor.

 

7.2           Representations
and Warranties.  Each of the
representations and warranties of the Company qualified by materiality must be
true and correct in all respects as of the Closing as though made at that time
(except for representations and warranties that speak as of a specific date,
which representations and warranties must be true and correct as of such date)
and each of the representations and warranties of the Company not qualified by
materiality must be true and correct in all material respects as of the Closing
as though made at that time (except for representations and warranties that
speak as of a specific date, which representations and warranties must be true
and correct as of such date) and the Company must have performed and complied
in all material respects with the covenants and conditions required by this
Agreement to be performed or complied with by the Company at or prior to the
Closing.  The Investor must have received
a certificate or certificates dated as of the First Closing Date or the Second Closing
Date, as applicable, and executed by the Chief Executive Officer or the Chief
Financial Officer of the Company certifying as to the matters in contained in
this Section 7.2 and as to such other matters as may be reasonably
requested by such Investor, including, but not limited to, the Company Certificate,
Bylaws, Board of Directors’ resolutions relating to the transactions
contemplated hereby and the incumbency and signatures of each of the officers
of the Company who may execute on behalf of the Company any document delivered
at the Closing.

 

7.3           No
Prohibitions.  No litigation,
statute, rule, regulation, executive order, decree, ruling or injunction will
have been enacted, entered, promulgated or endorsed by or in any court or
governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement or the Warrants and which could,
individually or in the aggregate, have a Material Adverse Effect.

 

12

 

7.4           Irrevocable
Instructions.  Irrevocable transfer
agent instructions, in form and substance satisfactory to the Investors, will
have been delivered to the Company’s transfer agent instructing the transfer
agent to deliver certificates representing the Common Shares within five (5) business
days following the First Closing Date or the Second Closing Date, as the case
may be.

 

7.5           Warrant
Certificates.  The Company shall have
delivered to the Investors certificates representing the Warrants purchased by
the Investors pursuant to this Agreement.

 

ARTICLE VIII

INDEMNIFICATION

 

In consideration of each Investor’s execution and
delivery of this Agreement and its acquisition of the Securities hereunder, and
in addition to all of the Company’s other obligations under this Agreement, the
Registration Rights Agreement and the Warrants, the Company will defend,
protect, indemnify and hold harmless each Investor and each other holder of the
Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the foregoing person’s agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (regardless of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by
an Indemnitee as a result of, or arising out of, or relating to (a) any
breach of any representation or warranty made by the Company herein or in any
other certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained herein
or in any other certificate, instrument or document contemplated hereby or
thereby or (c) any cause of action, suit or claim brought or made against
such Indemnitee and arising out of or resulting from the execution, delivery,
performance, breach or enforcement of this Agreement or the Registration Rights
Agreement or Warrants by the Company.  To
the extent that the foregoing undertaking by the Company is unenforceable for
any reason, the Company will make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities that is permissible under
applicable law.

 

The Indemnitees shall have the right to employ
separate counsel in any such proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnitees unless: (i) the Company has agreed in writing to pay such
fees and expenses; (ii) the Company shall have failed to promptly assume
the defense of such proceeding and to employ counsel reasonably satisfactory to
such Indemnitees in any such proceeding; or (iii) the named parties to any
such proceeding (including any impleaded parties) include both such Indemnitees
and the Company, and such Indemnitees shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnitees and the Company (in which case, if such Indemnitees notify the
Company in writing that they elect to employ separate counsel at the expense of
the Company, the Company shall not have the right to assume the defense thereof
and such counsel shall be at the reasonable expense of the Company; provided,
however, that in no event shall the Company be responsible for the fees and expenses
of more than one separate counsel).  The
Company shall not be liable for any settlement of any such proceeding effected
without its written consent, which consent shall not be unreasonably withheld.  The Company shall not, without the prior
written consent of a majority of the Indemnitees, effect any settlement of any
pending 

 

13

 

proceeding
in respect of which Indemnitees are a party, unless such settlement includes an
unconditional release of such Indemnitees from all liabilities that are the
subject matter of such proceeding. 
Subject to the foregoing, all fees and expenses (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend any such proceeding in a manner inconsistent with this Article VIII)
of the Indemnitees shall be paid to the Indemnitees as incurred, within ten (10) business
days of written notice thereof to the Company, which notice shall be delivered
no more frequently than on a monthly basis; provided, that the Indemnitees
shall reimburse the Company for any and all such fees and expenses to the
extent it is finally judicially determined that such Indemnitees are not
entitled to indemnification hereunder.

 

ARTICLE IX

DEFINITIONS

 

9.1           “Bylaws”
has the meaning set forth in Section 3.5.

 

9.2           “Closing”
means the closing of the purchase and sale of the Securities under this
Agreement on the First Closing Date or the Second Closing Date.

 

9.3           “Common
Shares” has the meaning set forth in the Recitals.

 

9.4           “Common
Stock” means the common stock, par value $.0001 per share, of the Company.

 

9.5           “Company”
means DynTek, Inc.

 

9.6           “Company
Certificate” has the meaning set forth in Section 3.5.

 

9.7           “Company
SEC Filings” has the meaning set forth in Section 3.6.

 

9.8           “Environmental
Laws” has the meaning set forth in Section 3.11.

 

9.9           “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

9.10         “First
Closing Date” has the meaning set forth in Section 1.3.

 

9.11         “Indemnified
Liabilities” has the meaning set forth in Article VIII.

 

9.12         “Indemnitees”
has the meaning set forth in Article VIII.

 

9.13         “Intellectual
Property” has the meaning set forth in Section 3.9.

 

9.14         “Investors”
means the investors whose names are set forth on the signature pages of
this Agreement, and their permitted transferees.

 

9.15         “Lien”
means any mortgage, pledge, security interest, encumbrance, lien or charge of
any kind (including any conditional sale or other title retention agreement,
any lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction in connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).

 

14

 

9.16         “Material
Adverse Effect” means a material adverse effect on (a) the business,
operations, assets, liabilities, rights, obligations or financial condition of
the Company and its Subsidiaries, taken as a whole, or (b) the ability of
the Company to perform its obligations pursuant to the transactions
contemplated by this Agreement or under the agreements or instruments to be
entered into or filed in connection herewith, including the Registration Rights
Agreement and the Warrants.

 

9.17         “Preferred
Stock” has the meaning set forth in Section 3.3.

 

9.18         “Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date
of this Agreement and among the parties to this Agreement, in the form attached
hereto as Exhibit C.

 

9.19         “Regulation
D” means Regulation D as promulgated by the SEC under the Securities Act.

 

9.20         “Rule 144”
and “Rule 144(k)” mean Rule 144 and Rule 144(k), respectively,
promulgated under the Securities Act, or any successor rule.

 

9.21         “SEC”
means the United States Securities and Exchange Commission.

 

9.22         “Second
Closing Date” has the meaning set forth in Section 1.3.

 

9.23         “Securities”
has the meaning set forth in the Recitals.

 

9.24         “Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute.

 

9.25         “Significant
Subsidiary” has the meaning set forth in Section 3.18.

 

9.26         “Subsidiary”
means a Corporation or other business entity in which the Company controls,
either directly or indirectly, at least 50% of the voting power and which meets
the test of a significant subsidiary as defined in Rule 1-02(w) of
Regulation S-X promulgated under the Exchange Act.

 

9.27         “Warrants”
has the meaning set forth in the Recitals.

 

9.28         “Warrant
Shares” means the number of shares of Common Stock purchaseable by the
Warrants.

 

ARTICLE X

GOVERNING LAW; MISCELLANEOUS

 

10.1         Governing
Law; Jurisdiction; Jury Trial Waiver. 
This Agreement will be governed by and interpreted in accordance with
the laws of the State of California without regard to the principles of
conflict of laws.  The parties hereto
hereby submit to the exclusive jurisdiction of the United States federal and
state courts located in the County of Orange, State of California with respect
to any dispute arising under this Agreement, the agreements entered into in
connection herewith or the transactions contemplated hereby or thereby. EACH
PARTY HEREBY 

 

15

 

IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED
HEREBY.

 

10.2         Counterparts;
Signatures by Facsimile.  This Agreement
may be executed in two or more counterparts, all of which are considered one
and the same agreement and will become effective when counterparts have been
signed by each party and delivered to the other parties.  This Agreement, once executed by a party, may
be delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.

 

10.3         Headings.  The headings of this Agreement are for
convenience of reference only, are not part of this Agreement and do not affect
its interpretation.

 

10.4         Severability.  If any provision of this Agreement is invalid
or unenforceable under any applicable statute or rule of law, then such
provision will be deemed modified in order to conform with such statute or rule of
law.  Any provision hereof that may prove
invalid or unenforceable under any law will not affect the validity or
enforceability of any other provision hereof.

 

10.5         Entire
Agreement; Amendments.  This
Agreement, the Registration Rights Agreement (including all schedules and
exhibits thereto) and the Warrants constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein.  This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to
the subject matter hereof.  No provision
of this Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.

 

10.6         Notices.  Any notices required or permitted to be given
under the terms of this Agreement must be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and will be effective
five days after being placed in the mail, if mailed by regular U.S. mail, or
upon receipt, if delivered personally, by courier (including a recognized
overnight delivery service) or by facsimile, in each case addressed to a
party.  The addresses for such
communications are:

 

	
  If to the
  Company:

  	
  Chief Financial
  Officer

  
	
   

  	
  DynTek, Inc.

  
	
   

  	
  19700 Fairchild Road, Suite 230

  
	
   

  	
  Irvine, California 92612

  
	
   

  	
  Fax: (949) 955-0086

  
	
   

  	
   

  
	
  With copies to:

  	
  Christopher Ivey, Esq.

  
	
   

  	
  Stradling Yocca Carlson & Rauth

  
	
   

  	
  660 Newport Center Drive, Suite 1600

  
	
   

  	
  Newport Beach, California 92660

  
	
   

  	
  Fax: (949) 725-4100

  

 

If to an Investor: 
To the address set forth immediately below such Investor’s name on the
signature pages hereto.

 

16

 

	
  With a copy to:

  	
  Damon Testaverde

  
	
   

  	
  Network 1 Financial Securities, Inc.

  
	
   

  	
  The Galleria, Penthouse

  
	
   

  	
  2 Bridge Avenue, Building 2

  
	
   

  	
  Red Bank, New Jersey 07707

  

 

Each party will provide written notice to the other
parties of any change in its address in accordance with the notice provisions
hereof.

 

10.7         Successors
and Assigns.  This Agreement is
binding upon and inures to the benefit of the parties and their successors and
assigns.  The Company will not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Investors, and no Investor may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the
Company.  Notwithstanding the foregoing,
an Investor may assign all or part of its rights and obligations hereunder to
any of its “affiliates,” as that term is defined under the Securities Act,
without the consent of the Company so long as the affiliate is an accredited
investor (within the meaning of Regulation D under the Securities Act) and
agrees in writing to be bound by this Agreement.  This provision does not limit the Investor’s
right to transfer the Securities pursuant to the terms of this Agreement or to
assign the Investor’s rights hereunder to any such transferee pursuant to the
terms of this Agreement.

 

10.8         Third
Party Beneficiaries.  This Agreement
is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.

 

10.9         No
Other Representations.  The Company
makes no representations or warranties in any oral or written information
provided to Investors, other than the representations and warranties included
herein.

 

10.10       Further
Assurances.  Each party will do and
perform, or cause to be done and performed, all such further acts and things,
and will execute and deliver all other agreements, certificates, instruments
and documents, as another party may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.

 

10.11       No
Strict Construction.  The language
used in this Agreement is deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be
applied against any party.

 

10.12       Equitable
Relief.  The Company recognizes that,
if it fails to perform or discharge any of its obligations under this
Agreement, any remedy at law may prove to be inadequate relief to the
Investors.  The Company therefore agrees
that the Investors are entitled to seek temporary and permanent injunctive
relief in any such case.

 

[SIGNATURE PAGE FOLLOWS]

 

17

 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned Investors and the
Company have caused this Securities Purchase Agreement to be duly executed as
of the date first above written.

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  DYNTEK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Casper Zublin, Jr.

  
	
   

  	
  Name:

  	
  Casper Zublin, Jr.

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
					

 

18

 

OMNIBUS SIGNATURE PAGE TO

DYNTEK, INC.

SECURITIES PURCHASE AGREEMENT

 

The undersigned hereby executes and delivers the
Securities Purchase Agreement to which this Signature Page is attached,
which, together with all counterparts of the Agreement and Signature Pages of
the other parties named in said Agreement, shall constitute one and the same
document in accordance with the terms of the Agreement.

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Investor Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Sign Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Securities Purchased:

  
	
   

  	
   

  
	
   

  	
  Common Shares:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Warrants (Number of Warrant Shares):

  	
   

  
													

 

If the name in which the
Share Certificates and Warrants are to be issued or the registered address of
the holder thereof is different than the name and address above, please provide
instructions below:

 

	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Registered Address:EXHIBIT 10.8

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS
AGREEMENT, dated as of March 8, 2006, is made by and among DynTek, Inc.,
a Delaware corporation, with headquarters located at 19700 Fairchild Road, Suite 230,
Irvine, California 92612 (the “Company”), and the investors named on the
signature pages hereto (the “Initial Investors”).

 

RECITALS:

 

A.            In
connection with the Securities Purchase Agreement dated March 8, 2006
between the Initial Investors and the Company (the “Purchase Agreement”), the
Company has agreed, upon the terms and subject to the conditions of the
Purchase Agreement, to issue and sell to the Initial Investors such number of
shares of the Company’s Common Stock (the “Common Shares”) and warrants to
purchase shares of the Company’s Common Stock as set forth in the Purchase
Agreement (the “Warrants” and, collectively with the Common Shares, the “Securities”).

 

B.            In
order to induce the Initial Investors to execute and deliver the Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act and applicable state securities laws with respect to the
Securities.

 

In consideration of the
premises and the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Initial Investors hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Capitalized terms used
and not otherwise defined herein have the respective meanings given them set
forth in the Purchase Agreement.  In
addition, as used in this Agreement, the following terms have the following
meanings:

 

1.1           “Closing
Date” means the date on which the initial purchase of the Securities is
consummated pursuant to the Purchase Agreement.

 

1.2           “Common
Shares” means the shares of Common Stock sold pursuant to the Purchase
Agreement.

 

1.3           “Investors”
means the Initial Investors and any of their transferees or assignees who agree
to become bound by the provisions of this Agreement in accordance with Article IX
hereof.

 

1.4           “Registrable
Securities” means the Common Shares and the Warrant Shares, and any shares of
capital stock issued or issuable from time to time (with any adjustments) in
exchange for or otherwise with respect to the Common Shares or Warrant Shares
(including shares issued pursuant to Section 2.2 hereof).

 

1.5           “Registration
Period” means the period between the date of this Agreement and the earlier of (i) the
date on which (x) all of the Registrable Securities have been sold by the
Investors pursuant to the Registration Statement and (y) are freely tradable
under the Securities Act (except that this clause (y) shall not apply with
respect to Shares sold to affiliates), (ii) the second

 

 

anniversary of the
last date on which Warrant Shares are purchased under any then-outstanding
Warrants, or (iii) the date on which all the Registrable Securities may be
immediately sold by the Investors without registration and without restriction
as to the number of Registrable Securities to be sold, pursuant to Rule 144
or otherwise.

 

1.6           “Registration
Statement” means a Registration Statement of the Company filed under the
Securities Act.

 

1.7           The
terms “register,” “registered,” and “registration” refer to a registration
effected by preparing and filing a Registration Statement or statements in
compliance with the Securities Act and pursuant to Rule 415 and the
declaration or ordering of effectiveness of such Registration Statement by the
SEC.

 

1.8           “Rule 415”
means Rule 415 under the Securities Act, or any successor Rule providing
for offering securities on a continuous basis, and applicable rules and
regulations thereunder.

 

1.9           “Second
Closing Date” shall have the meaning subscribed to it in the Purchase
Agreement.

 

1.10         “Securities”
means the Common Shares and the Warrants sold pursuant to the Purchase
Agreement.

 

1.11         “Warrants”
means the warrants to purchase shares of the Company’s Common Stock sold
pursuant to the Purchase Agreement.

 

1.12         “Warrant
Shares” means the shares of the Company’s Common Stock that may be purchased
upon exercise of the Warrants.

 

ARTICLE II

REGISTRATION

 

2.1           Mandatory
Registration.  The Company shall file
with the SEC a Registration Statement on Form S-1, or such other form as
may then be available to effect a registration of all of the Registrable
Securities, registering all of the Registrable Securities for resale prior to
the earlier of (i) 30 days after the Second Closing Date under the
Purchase Agreement or (ii) June 30, 2006 (the “Required Filing Date”).

 

2.2           Effectiveness
of the Registration Statement.  The
Company will use its best efforts to cause the Registration Statement to be
declared effective by the SEC as soon as practicable after filing, and in any
event no later than the 60th day after the Required Filing Date (the “Required
Effective Date”).  However, so long as
the Company filed the Registration Statement by the Required Filing Date, (a) if
the SEC takes the position that registration of the resale of the Registrable
Securities by the Investors is not available under applicable laws, rules and
regulations and that the Company must register the offering of the Registrable
Securities as a primary offering by the Company, or (b) if the
Registration Statement receives SEC review, then the Required Effective Date
will be the 120th day after the Required Filing Date.  In the case of an SEC response described in
clause (a), the Company will, within 40 business days after the date the
Company receives such SEC response, file a Registration Statement as a primary
offering.  The Company’s best efforts
will

 

2

 

include, but not
be limited to, promptly responding to all comments received from the staff of
the SEC.  If the Company receives
notification from the SEC that the Registration Statement will receive no
action or review from the SEC, then the Company will cause the Registration
Statement to become effective within five business days after such SEC
notification.  Once the Registration
Statement is declared effective by the SEC, the Company will cause the
Registration Statement to remain effective throughout the Registration Period,
except as permitted under Section 3. 
On the date of each monthly anniversary of the date on which any breach
of this Section 2.2 first occurs (including failure to file a Registration
Statement or to cause a Registration Statement to be declared effective within
the time periods set forth herein) until the applicable default is cured (each,
a “Payment Date”), the Company shall pay to each Investor as damages additional
shares of the Company’s Common Stock equal to 2.0% of the Common Shares
purchased by such Investor pursuant to the Purchase Agreement and all such
shares shall become Registrable Securities; provided, that the total
number of shares of the Company’s Common Stock payable pursuant to this Section 2.2
to any Investor shall not exceed the aggregate number of Common Shares
purchased pursuant to the Purchase Agreement by such Investor.  In addition, should a Registration Statement
not be filed by June 30, 2006, the exercise price of the Warrants will be
reduced to $0.01 per share.

 

2.3           Piggyback
Registrations.

 

(a)           If,
at any time prior to the expiration of the Registration Period, the
Registration Statement contemplated in Section 2.1 above is not declared
effective with respect to all of the Registrable Securities and the Company
decides to register any of its securities for its own account or for the
account of others, then the Company will promptly give the Investors written
notice thereof and will use its best efforts to include in such registration
all or any part of the Registrable Securities requested by such Investors to be
included therein (excluding any Registrable Securities previously included in a
Registration Statement which has been declared effective and has not been
withdrawn).  This requirement does not
apply to Company registrations on Form S-4 or S-8 or their equivalents
relating to equity securities to be issued solely in connection with an
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans.  Each Investor must give its request for
registration under this paragraph to the Company in writing within 15 days
after receipt from the Company of notice of such pending registration.  If the registration for which the Company
gives notice is a public offering involving an underwriting, the Company will
so advise the Investors as part of the above-described written notice.  In that event, if the managing underwriter(s)
of the public offering impose a limitation on the number of shares of Common
Stock that may be included in the Registration Statement because, in such
underwriter(s)’ judgment, such limitation would be necessary to effect an
orderly public distribution, then the Company will be obligated to include only
such limited portion, if any, of the Registrable Securities with respect to
which such Investors have requested inclusion hereunder.  Any exclusion of Registrable Securities will
be made pro rata among all holders of the Company’s securities seeking to
include shares of Common Stock in proportion to the number of shares of Common
Stock sought to be included by those holders. 
However, the Company will not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities the holders of which
are not entitled by right to inclusion of such securities in such Registration
Statement or are not entitled pro rata inclusion with the Registrable
Securities.

 

(b)           No
right to registration of Registrable Securities under this Section 2.3
limits in any way the registration required under Section 2.1 above.  The obligations of the Company under this Section 2.3
expire upon the earlier of (i) the effectiveness of the Registration
Statement filed pursuant to Section 2.1 above, (ii) after the Company
has afforded the opportunity for the Investors

 

3

 

to exercise
registration rights under this Section 2.3 for two registrations (provided,
however, that any Investor that has had any Registrable Securities excluded
from any Registration Statement in accordance with this Section 2.3 may
include in any additional Registration Statement filed by the Company the
Registrable Securities so excluded) or (iii) when all of the Registrable
Securities held by any Investor may be sold by such Investor under Rule 144
without being subject to any volume restrictions.

 

ARTICLE III

ADDITIONAL OBLIGATIONS OF THE COMPANY

 

3.1           Continued
Effectiveness of Registration Statement. 
Subject to the limitations set forth in Section 3.6, the Company
will keep the Registration Statement covering the Registrable Securities
effective under Rule 415 at all times during the Registration Period.  In the event that the number of shares
available under a Registration Statement filed pursuant to this Agreement is
insufficient to cover all of the Registrable Securities issued, the Company
will (if permitted) amend the Registration Statement or file a new Registration
Statement (on the short form available therefor, if applicable), or both, so as
to cover all of the Registrable Securities. 
The Company will file such amendment or new Registration Statement as
soon as practicable, but in no event later than 30 business days after the
necessity therefor arises (based upon the market price of the Common Stock and
other relevant factors on which the Company reasonably elects to rely).  The Company will use its best efforts to
cause such amendment or new Registration Statement to become effective as soon
as is practicable after the filing thereof, but in no event later than 90 days
after the date on which the Company reasonably first determines the need
therefor.

 

3.2           Accuracy
of Registration Statement.  Any
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) filed by the Company covering Registrable
Securities will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.  The Company will prepare and
file with the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to permit sales pursuant to
the Registration Statement at all times during the Registration Period, and,
during such period, will comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities of the Company covered
by the Registration Statement until the termination of the Registration Period,
or if earlier, until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof as set forth in the Registration Statement.

 

3.3           Furnishing
Documentation.  The Company will
furnish to each Investor whose Registrable Securities are included in a
Registration Statement, or to its legal counsel, (a) promptly after such
document is filed with the SEC, one copy of any Registration Statement filed
pursuant to this Agreement and any amendments thereto, each preliminary
prospectus and final prospectus and each amendment or supplement thereto; and (b) a
number of copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto, and such other documents as the Investor
may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by the Investor. 
The Company will promptly notify by facsimile or email each Investor
whose Registrable Securities are included in any Registration Statement of the
effectiveness of the Registration Statement and any post-effective amendment.

 

4

 

3.4           Additional
Obligations.  The Company will use
its best efforts to (a) register and qualify the Registrable Securities
covered by a Registration Statement under such other securities or blue sky
laws of such jurisdictions as each Investor who holds (or has the right to
hold) Registrable Securities being offered reasonably requests, (b) prepare
and file in those jurisdictions any amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain their effectiveness during the Registration Period, (c) take
any other actions necessary to maintain such registrations and qualifications
in effect at all times during the Registration Period, and (d) take any
other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions. 
Notwithstanding the foregoing, the Company is not required, in connection
with such obligations, to (i) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 3.4,
(ii) subject itself to general taxation in any such jurisdiction, (iii) file
a general consent to service of process in any such jurisdiction, (iv) provide
any undertakings that cause material expense or material burden to the Company,
or (v) make any change in its charter or bylaws, which in each case the
Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders.

 

3.5           Underwritten
Offerings.  If the Investors who hold
a majority in interest of the Registrable Securities being offered in an
offering pursuant to a Registration Statement or any amendment or supplement
thereto under this Agreement select underwriters reasonably acceptable to the
Company for such offering, the Company will enter into and perform its
obligations under an underwriting agreement in usual and customary form
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering.

 

3.6           Suspension
of Registration.

 

(a)           The
Company will notify (by telephone and also by facsimile and reputable overnight
courier) each Investor who holds Registrable Securities being sold pursuant to
a Registration Statement of the happening of any event of which the Company has
knowledge as a result of which the prospectus included in the Registration
Statement as then in effect includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.  The Company
will make such notification as promptly as practicable (but in no event more
than two business days) after the Company becomes aware of the event, will
promptly (but in no event more than ten business days) prepare and file a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and will deliver a number of copies of such supplement
or amendment to each Investor as such Investor may reasonably request.

 

(b)           Notwithstanding
the obligations under Section 3.6(a), if in the good faith judgment of the
Company, following consultation with legal counsel, it would be detrimental to
the Company and its stockholders for resales of Registrable Securities to be
made pursuant to the Registration Statement due to the existence of a material
development or potential material development involving the Company which the
Company would be obligated to disclose in the Registration Statement, but which
disclosure would be premature or otherwise inadvisable at such time or would
reasonably be expected to have a material adverse effect upon the Company and
its stockholders, the Company will have the right to suspend the use of the
Registration Statement for a period of not more than forty-five days, provided,
however, that the Company may so defer or suspend the use of the Registration
Statement no more than one time in any twelve-month period.

 

5

 

(c)           Subject
to the Company’s rights under this Section 3, the Company will use its
best efforts to prevent the issuance of any stop order or other suspension of
effectiveness of a Registration Statement and, if such an order is issued, will
use its best efforts to obtain the withdrawal of such order at the earliest
possible time and to notify each Investor that holds Registrable Securities
being sold (or, in the event of an underwritten offering, the managing
underwriters) of the issuance of such order and the resolution thereof.

 

(d)           Notwithstanding
anything to the contrary contained herein or in the Purchase Agreement, if the
use of the Registration Statement is suspended by the Company, the Company will
promptly (but in no event more than two business days) give notice of the
suspension to all Investors whose securities are covered by the Registration
Statement, and will promptly (but in no event more than two business days)
notify each such Investor as soon as the use of the Registration Statement may
be resumed.  Notwithstanding anything to
the contrary contained herein or in the Purchase Agreement, the Company will
cause the Transfer Agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in accordance with the terms of the Purchase
Agreement in connection with any sale of Registrable Securities with respect to
which such Investor has entered into a contract for sale prior to receipt of
notice of such suspension and for which such Investor has not yet settled,
unless otherwise prohibited by law.

 

3.7           Review
by the Investors.  The Company will
permit a single firm of legal counsel, designated by the Investors who hold a
majority in interest of the Registrable Securities being sold pursuant to a
Registration Statement (“Investor’s Counsel”), to review the Registration
Statement and all amendments and supplements thereto a reasonable amount of
time (not to exceed five (5) days) prior to their filing with the SEC, and
will not file any document in a form to which such counsel reasonably objects,
unless otherwise required by law in the opinion of the Company’s counsel.  The sections of any such Registration
Statement including information with respect to the Investors, the Investors’
beneficial ownership of securities of the Company or the Investors’ intended
method of disposition of Registrable Securities must conform to the information
provided to the Company by each of the Investors or Investors Counsel.

 

3.8           Comfort
Letter; Legal Opinion.  At the
request of the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to a Registration Statement, and on the date
that Registrable Securities are delivered to an underwriter for sale in
connection with the Registration Statement, the Company will furnish to the
Investors and the underwriters (i) a letter, dated such date, from the
Company’s independent certified public accountants, in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters; and (ii) an
opinion, dated such date, from counsel representing the Company for purposes of
the Registration Statement, in form and substance as is customarily given in an
underwritten public offering, addressed to the underwriters and Investors.

 

3.9           Due
Diligence; Confidentiality.

 

(a)           The
Company will make available for inspection by any Investor whose Registrable
Securities are being sold pursuant to a Registration Statement, any underwriter
participating in any disposition pursuant to the Registration Statement, and
any attorney, accountant or other agent retained by any such Investor or
underwriter (collectively, the “Inspectors”), all pertinent financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the “Records”), as each Inspector reasonably deems necessary to
enable the Inspector

 

6

 

to exercise its
due diligence responsibility.  The
Company will cause its officers, directors and employees to supply all
information that any Inspector may reasonably request for purposes of
performing such due diligence.

 

(b)           Each
Inspector will hold in confidence, and will not make any disclosure (except to
an Investor) of, any Records or other information that the Company determines
in good faith to be confidential, and of which determination the Inspectors are
so notified, unless (i) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court or government body of competent jurisdiction, (iii) the information
in such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement (to the knowledge of the
relevant Inspector), (iv) the Records or other information was developed
independently by an Inspector without breach of this Agreement, (v) the
information was known to the Inspector before receipt of such information from
the Company, or (vi) the information was disclosed to the Inspector by a
third party without restriction.  The
Company is not required to disclose any confidential information in the Records
to any Inspector unless and until such Inspector has entered into a confidentiality
agreement (in form and substance reasonably satisfactory to the Company) with
the Company with respect thereto, substantially in the substance of this Section 3.9(b).  Each Investor will, upon learning that
disclosure of Records containing confidential information is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at the Company’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the Records deemed confidential.  Nothing herein will be deemed to limit the
Investor’s ability to sell Registrable Securities in a manner that is otherwise
consistent with applicable laws and regulations.

 

(c)           The
Company will hold in confidence, and will not make any disclosure of,
information concerning an Investor provided to the Company under this Agreement
unless (i) disclosure of such information is necessary to comply with
federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, (iv) such information has been made generally available to
the public other than by disclosure in violation of this Agreement or any other
agreement, (v) the information was disclosed to the Company by a third
party without restriction or (vi) such Investor consents to the form and
content of any such disclosure.  If the
Company learns that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, the Company will give prompt notice to such Investor prior
to making such disclosure and allow such Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.

 

3.10         Transfer
Agent; Registrar.  The Company will
provide a transfer agent and registrar, which may be a single entity, for the
Registrable Securities not later than the effective date of the Registration
Statement.

 

3.11         Share
Certificates.  The Company will
cooperate with the Investors who hold Registrable Securities being sold and
with the managing underwriter(s), if any, to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to a Registration Statement and
will enable such certificates to be in such denominations or amounts as the
case may be, and registered in such names as the Investors or

 

7

 

the managing
underwriter(s), if any, may reasonably request, all in accordance with Article V
of the Purchase Agreement.

 

3.12         Plan
of Distribution.  At the request of
the Investors holding a majority in interest of the Registrable Securities
registered pursuant to a Registration Statement, the Company will promptly prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement, and the prospectus used in
connection with the Registration Statement, as may be necessary in order to
change the plan of distribution set forth in such Registration Statement.

 

3.13         Securities
Laws Compliance.  The Company will
comply with all applicable laws related to any Registration Statement relating
to the offer and sale of Registrable Securities and with all applicable rules and
regulations of governmental authorities in connection therewith (including,
without limitation, the Securities Act, the Exchange Act and the rules and
regulations promulgated by the SEC).

 

3.14         Further
Assurances.  The Company will take
all other reasonable actions as any Investor or the underwriters, if any, may
reasonably request to expedite and facilitate disposition by such Investor of
the Registrable Securities pursuant to the Registration Statement.

 

ARTICLE IV

OBLIGATIONS OF THE INVESTORS

 

4.1           Investor
Information.  As a condition to the
obligations of the Company to complete any registration pursuant to this
Agreement with respect to the Registrable Securities of each Investor, such
Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as is reasonably required by the Company to
effect the registration of the Registrable Securities.  At least ten business days prior to the first
anticipated filing date of a Registration Statement for any registration under
this Agreement, the Company will notify each Investor of the information the
Company requires from that Investor if the Investor elects to have any of its Registrable
Securities included in the Registration Statement, other than information
contained in the Selling Securityholder Notice and Questionnaire attached
hereto as Annex A, which shall be completed and delivered to the Company no
later than five days after the Closing Date or Second Closing Date, as
applicable.  If, within two business days
prior to the filing date, the Company has not received the requested
information from an Investor, then the Company may file the Registration
Statement without including Registrable Securities of that Investor.

 

4.2           Further
Assurances.  Each Investor will
cooperate with the Company, as reasonably requested by the Company, in
connection with the preparation and filing of any Registration Statement
hereunder, unless such Investor has notified the Company in writing of such
Investor’s election to exclude all of such Investor’s Registrable Securities
from the Registration Statement.

 

4.3           Suspension
of Sales.  Upon receipt of any notice
from the Company of the happening of any event of the kind described in Section 3.6,
each Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until it receives copies of the supplemented or amended prospectus
contemplated by Section 3.6.  If so
directed by the Company, each Investor will deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all

 

8

 

copies in the
Investor’s possession (other than a limited number of file copies) of the
prospectus covering such Registrable Securities that is current at the time of
receipt of such notice.

 

4.4           Underwritten
Offerings.

 

(a)           If
Investors holding a majority in interest of the Registrable Securities being
registered (with the approval of the Initial Investors) determine to engage the
services of an underwriter, each Investor will enter into and perform such
Investor’s obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering, and will take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified
the Company in writing of such Investor’s election to exclude all of its
Registrable Securities from such Registration Statement.

 

(b)           Without
limiting any Investor’s rights under Section 2.1 hereof, no Investor may
participate in any underwritten distribution hereunder unless such Investor (a) agrees
to sell such Investor’s Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder to
approve such arrangements, (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and (c) agrees
to pay its pro rata share of all underwriting discounts and commissions
applicable with respect to its Registrable Securities.

 

ARTICLE V

EXPENSES OF REGISTRATION

 

The Company will bear all
reasonable expenses, other than underwriting discounts and commissions, and
transfer taxes, if any, incurred in connection with registrations, filings or
qualifications pursuant to Articles II and III of this Agreement, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company, and
the reasonable fees and disbursements of one firm of legal counsel selected by
the Initial Investors pursuant to Section 3.7 hereof.

 

9

 

ARTICLE VI

INDEMNIFICATION

 

In the event that any
Registrable Securities are included in a Registration Statement under this
Agreement:

 

6.1           To
the extent permitted by law, the Company will indemnify, defend and hold
harmless each Investor that holds such Registrable Securities, and agents,
employees, attorneys, accountants, underwriters (as defined in the Securities
Act) for such Investors and any directors or officers of such Investor or such
underwriter and any person who controls such Investor or such underwriter
within the meaning of the Securities Act or the Exchange Act (each, an “Investor
Indemnified Person”) against any losses, claims, damages, expenses or
liabilities (collectively, and together with actions, proceedings or inquiries
by any regulatory or self-regulatory organization, whether commenced or
threatened in respect thereof, “Claims”) to which 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 following statements, omissions or
violations in a Registration Statement filed pursuant to this Agreement, any
post-effective amendment thereof or any prospectus included therein:  (a) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any post-effective amendment thereof or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (b) any untrue statement or
alleged untrue statement of a material fact contained in the prospectus or any
preliminary prospectus (as it may be amended or supplemented) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (c) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act or any
other law, including without limitation any state securities law or any rule or
regulation thereunder (the matters in the foregoing clauses (a) through (c) being,
collectively, “Violations”).  Subject to
the restrictions set forth in Section 6.4 with respect to the number of
legal counsel, the Company will reimburse the Investors and each such attorney,
accountant, underwriter or controlling person and each such other Investor
Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any Claim.  Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6.1
(i) does not apply to a Claim by an Investor Indemnified Person arising
out of or based upon a Violation that occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Investor
Indemnified Person expressly for use in the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus or supplement
thereto was timely made available by the Company pursuant to Section 3.3
hereof; and (ii) does not apply to amounts paid in settlement of any Claim
if such settlement is made without the prior written consent of the Company,
which consent will not be unreasonably withheld. This indemnity obligation will
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Persons and will survive the transfer of the
Registrable Securities by the Investors under Article IX of this
Agreement.

 

6.2           In
connection with any Registration Statement in which an Investor is
participating, each such Investor will indemnify and hold harmless, to the same
extent and in the same manner set forth in Section 6.1 above, the Company,
each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder

 

10

 

within the meaning
of the Securities Act or the Exchange Act (each a “Company Indemnified Person”)
against any Claim to which any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in such
Registration Statement.  Subject to the
restrictions set forth in Section 6.4 with respect to the number of legal
counsel, such Investor will promptly reimburse each Company Indemnified Person
for any legal or other expenses (promptly as such expenses are incurred and due
and payable) reasonably incurred by them in connection with investigating or
defending any such Claim.   However, the
indemnity agreement contained in this Section 6.2 does not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent will not be
unreasonably withheld, and no Investor will be liable under this Agreement
(including this Section 6.2 and Article VII) for the amount of any
Claim that exceeds the net proceeds actually received by such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement.  This indemnity will remain in
full force and effect regardless of any investigation made by or on behalf of a
Company Indemnified Party and will survive the transfer of the Registrable
Securities by the Investors under Article IX of this Agreement.

 

6.3           If
any proceeding shall be brought or any claim asserted against any person
entitled to indemnity under Sections 6.1 or 6.2 hereof (an “Indemnified Party”),
such Indemnified Party promptly shall notify the person from whom indemnity is
sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all reasonable fees
and expenses incurred in connection with defense thereof; provided, however,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.

 

6.4           An
Indemnified Party shall have the right to employ separate counsel in any such
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or
Indemnified Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (ii) the Indemnifying Party shall
have failed promptly to assume the defense of such proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
proceeding; or (iii) the named parties to any such proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the reasonable expense of the Indemnifying Party;
provided, however, that in no event shall the Indemnifying Party be responsible
for the fees and expenses of more than one separate counsel).  The Indemnifying Party shall not be liable
for any settlement of any such proceeding effected without its written consent,
which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party
from all liability on Claims that are the subject matter of such proceeding.

 

11

 

6.5           Subject
to the foregoing, all reasonable fees and expenses of the Indemnified Party
(including fees and expenses to the extent incurred in connection with
investigating or preparing to defend such proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party, which notice shall be delivered no more frequently than on
a monthly basis (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).

 

ARTICLE VII

CONTRIBUTION

 

If the indemnification
provided for in Article VI is held by a court of competent jurisdiction to
be unavailable to an indemnified party with respect to any loss, liability,
claim, damage or expense referred to herein, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage, or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and of
the indemnified party, on the other, in connection with the statements or
omissions that resulted in such loss, liability, claim, damage or expense, as
well as any other relevant equitable considerations; provided, that in no event
shall any contribution by a Investor under this Article VII exceed the net
proceeds from the offering received by such Investor, except in the case of
fraud by such Investor.  The relative
fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.

 

ARTICLE VIII

EXCHANGE ACT REPORTING

 

In order to make
available to the Investors the benefits of Rule 144 or any similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration, the Company will:

 

(a)           File
with the SEC in a timely manner, and make and keep available, all reports and
other documents required of the Company under the Securities Act and the
Exchange Act so long as the Company remains subject to such requirements and
file and make available of such reports and other documents as required for the
applicable provisions of Rule 144; and

 

(b)           Furnish
to each Investor, so long as such Investor holds Registrable Securities,
promptly upon the Investor’s request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
filed by the Company with the SEC, and (iii) such other information as may
be reasonably requested to permit the Investors to sell such securities
pursuant to Rule 144 without registration.

 

12

 

ARTICLE IX

ASSIGNMENT OF REGISTRATION RIGHTS

 

The rights of the Initial
Investors hereunder, including the right to have the Company register
Registrable Securities pursuant to this Agreement, may be assigned by the
Initial Investors to transferees or assignees of all or any portion of the
Registrable Securities, but only if (a) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being transferred or assigned, (c) after such
transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (d) at or before the time the Company received the
written notice contemplated by clause (b) of this sentence, the transferee
or assignee agrees in writing with the Company to be bound by all of the
provisions contained herein, (e) such transfer is made in accordance with
the applicable requirements of the Purchase Agreement, and (f) the
transferee is an “accredited investor” as that term is defined in Rule 501
of Regulation D.

 

ARTICLE X

AMENDMENT OF REGISTRATION RIGHTS

 

This Agreement may be
amended and the obligations hereunder may be waived (either generally or in a
particular instance, and either retroactively or prospectively) only with the
written consent of the Company and of the Investors who then hold a majority of
the Registrable Securities.  Any
amendment or waiver effected in accordance with this Article X is binding
upon each Investor and the Company.

 

ARTICLE XI

MISCELLANEOUS

 

11.1         Conflicting
Instructions.  A person or entity is
deemed to be a holder of Registrable Securities whenever such person or entity
owns of record such Registrable Securities. 
If the Company receives conflicting instructions, notices or elections
from two or more persons or entities with respect to the same Registrable
Securities, the Company will act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.

 

11.2         Notices.  Any notices required or permitted to be given
under the terms of this Agreement will be given as set forth in the Purchase
Agreement.

 

11.3         Waiver.  Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, does not operate as a waiver thereof.

 

11.4         Governing
Law.  This Agreement will be governed
by and interpreted in accordance with the federal securities laws and the laws
of the State of California without regard to the principles of conflict of
laws.  The parties hereto hereby submit
to the exclusive jurisdiction of the United States federal and state courts
located in the County of Orange, State of California with respect to any
dispute arising under this Agreement, the agreements entered into in connection
herewith or the transactions contemplated hereby or thereby. EACH PARTY HEREBY
IRREVOCABLY WAIVES

 

13

 

ANY RIGHT THAT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED
HEREBY.

 

11.5         Severability.  If any provision of this Agreement is invalid
or unenforceable under any applicable statute or rule of law, then such
provision will be deemed modified in order to conform with such statute or rule of
law.  Any provision hereof that may prove
invalid or unenforceable under any law will not affect the validity or
enforceability of any other provision hereof.

 

11.6         Entire
Agreement.  This Agreement and the
Purchase Agreement (including all schedules and exhibits thereto) constitute
the entire agreement among the parties hereto with respect to the subject
matter hereof and thereof.  There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein.  This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.

 

11.7         Successors
and Assigns.  Subject to the
requirements of Article IX hereof, this Agreement inures to the benefit of
and is binding upon the successors and assigns of each of the parties hereto.  Notwithstanding anything to the contrary
herein, including, without limitation, Article IX, the rights of an
Investor hereunder are assignable to and exercisable by a bona fide pledgee of
the Registrable Securities in connection with an Investor’s margin or brokerage
accounts.

 

11.8         Headings.  The headings of this Agreement are for
convenience of reference only, are not part of this Agreement and do not affect
its interpretation.

 

11.9         Counterparts.  This Agreement may be executed in two or more
counterparts, each of which is deemed an original but all of which constitute
one and the same agreement.  This
Agreement, once executed by a party, may be delivered to the other party hereto
by facsimile transmission, and facsimile signatures are binding on the parties
hereto.

 

11.10       Further
Assurances.  Each party will do and
perform, or cause to be done and performed, all such further acts and things,
and will execute and deliver all other agreements, certificates, instruments
and documents, as another party may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.

 

11.11       Consents.  Unless otherwise provided in this Agreement,
all consents and other determinations to be made by the Investors pursuant to
this Agreement will be made by the Investors holding a majority in interest of
the Registrable Securities.

 

11.12       No
Strict Construction.  The language
used in this Agreement is deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be
applied against any party.

 

[SIGNATURES ON FOLLOWING PAGE]

 

14

 

IN WITNESS WHEREOF, the undersigned Investors and the
Company have caused this Registration Rights Agreement to be duly executed as
of the date first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  DYNTEK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Casper Zublin, Jr.

  
	
   

  	
  Name:

  	
  Casper Zublin, Jr.

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
					

 

15

 

OMNIBUS SIGNATURE PAGE TO

DYNTEK, INC.

REGISTRATION RIGHTS AGREEMENT

 

The undersigned hereby
executes and delivers the Registration Rights Agreement to which this Signature
Page is attached, which, together with all counterparts of the Agreement
and Signature Pages of the other parties named in said Agreement, shall
constitute one and the same document in accordance with the terms of the
Agreement.

 

	
   

  	
  Investor Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Sign Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile:

  	
   

  
	
   

  	
   

  
	
   

  	
  Number of Common Shares:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Warrant
  Shares:

  	
   

  
				

 

i

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