Document:

Exhibit 10.3

SECURITY AND PLEDGE AGREEMENT

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

Recitals

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

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

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

ARTICLE 1.

GRANT OF SECURITY

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

(a)                                  all
Accounts;

(b)                                 all
Chattel Paper;

(c)                                  all documents;

(d)           all General Intangibles (including
Marks, Copyrights, Patents, payment intangibles, Proprietary 

Information
and Trade Secrets);

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

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(f)                                    all
Instruments;

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

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

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

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

(k)                                  the
commercial tort claims identified on Schedule B hereto; and

(l)            to
the extent not otherwise included, all Proceeds, tort claims, insurance claims
and other rights to payments not otherwise included in the foregoing and
products of the foregoing and all other tangible and intangible personal
property whatsoever of any Debtor including all cash, products, offspring,
rents, revenues, issues, profits, royalties, income, benefits, accessions,
additions, substitutions and replacements of and to any and all of the
foregoing, including all Proceeds of and to any of the property of any of the
Debtors described in the preceding paragraphs of this Section 1.1 (including,
without limitation, any loss proceeds or other Proceeds of insurance thereon
(whether or not any Note Purchaser is loss payee thereof), and any indemnity,
warranty or guarantee, payable by any reason of loss or damage to or otherwise
with respect to any of the foregoing, and all causes of action, claims and
warranties now or hereafter held by any Debtor in respect of any of the items
listed above);

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

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

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

ARTICLE 2

GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

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

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

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

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

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Section
2.4                                   Chief
Executive Office; Records.

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

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

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

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

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

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Schedule E of this Agreement.  No Debtor has transacted business at any time
during the immediately preceding five year period, and does not currently
transact business, under any other legal names or trade names other than the
prior legal names and trade names (if any) set forth on Schedule E attached
hereto.  No Debtor shall change its
jurisdiction of organization without the Purchaser’s prior written
consent.  No Debtor shall change its
legal name or transact business under any other trade name without first giving
30 days’ prior written notice of its intent to do so to the Purchaser.  With respect to such new name or jurisdiction
of organization, such Debtor shall have taken all action reasonably requested
by the Purchaser, to maintain the Security Interest at all times fully
perfected and in full force and effect.

ARTICLE 3

SPECIAL
PROVISIONS CONCERNING

ACCOUNTS; INSTRUMENTS

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

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

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

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or all amounts then in, or thereafter
deposited in, the Cash Collateral Account which application shall be effected
in the manner provided in Section 9.4 of this Agreement.  The reasonable costs and expenses (including
reasonable attorneys’ fees) of collection, whether incurred by such Debtor or
the Purchaser, shall be borne by such Debtor. 
The Purchaser shall deliver a copy of each notice referred to in the
preceding clause (b) to such Debtor; provided, that the failure by the
Purchaser to so notify such Debtor shall not affect the effectiveness of such
notice or the other rights of the Purchaser created by this Section 3.3.

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

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

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

ARTICLE 4

SPECIAL PROVISIONS CONCERNING MARKS

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

 6
 

service mark or trade name in any respect
which could reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities or condition (financial or
otherwise) of such Debtor.  Each Debtor
represents and warrants that except as listed on Schedule F, as of the
date hereof it is the beneficial and record owner of all trademark
registrations and applications listed in Schedule F hereto and that said
registrations are valid and subsisting, and that no Debtor is aware of any
third-party claim that any of said registrations in respect of any material
Mark is invalid or unenforceable.  Each
Debtor hereby grants to the Purchaser an absolute power of attorney to sign, upon
the occurrence and during the continuance of an Event of Default, any document
which may be required by the United States Patent and Trademark Office in order
to effect an absolute assignment of all right, title and interest in each Mark,
and record the same;
provided that such power of attorney may be exercised only if such Debtor does
not have a Senior Lender.

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

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

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

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

 7
 

Purchaser and at the expense of such Debtor,
confirming the assignment for security in such Mark to the Purchaser hereunder,
in such form as may be reasonably satisfactory to the Purchaser.

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

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

ARTICLE 5

SPECIAL
PROVISIONS CONCERNING

PATENTS, COPYRIGHTS AND TRADE SECRETS

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

 8
 

each case in any respect which could
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities or condition (financial or otherwise)
of such Debtor.  Each Debtor hereby
grants to the Purchaser an absolute power of attorney to sign, upon the
occurrence and during the continuance of an Event of Default, any document
which may be required by the United States Patent and Trademark Office or the
United States Copyright Office in order to effect an absolute assignment of all
right, title and interest in each Patent and Copyright, and to record the same; provided that such power of attorney may be
exercised only if such Debtor does not have a Senior Lender.

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

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

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

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

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

 9
 

Purchaser shall be entitled to exercise the
power of attorney referred to in Section 5.1 hereof to execute, cause to be
acknowledged and notarized and to record said absolute assignment with the
applicable agency; (b) take and practice or sell the Patents and Copyrights;
and (c) direct such Debtor to refrain, in which event such Debtor shall
refrain, from practicing the Patents and using the Copyrights directly or
indirectly, and such Debtor shall execute such other and further documents as
the Purchaser may request further to confirm this and to transfer ownership of
the Patents and Copyrights to the Purchaser for the benefit of the Purchaser.

ARTICLE 6

SPECIAL PROVISIONS CONCERNING STOCK COLLATERAL

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

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

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

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

 10
 

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

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

ARTICLE 7

PROVISIONS CONCERNING ALL COLLATERAL

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

 11
 

or diminished by reason of the fact that such
Collateral may be lost, destroyed, stolen, damaged or for any reason whatsoever
unavailable to such Debtor.

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

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

ARTICLE 8

GUARANTEE

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

 12
 

acknowledged, the Subsidiary hereby
unconditionally and irrevocably guarantees jointly and severally to the
Purchaser, the due and punctual payment of all present and future Obligations,
in each case as and when the same shall become due and payable, whether at
stated maturity, by acceleration, or otherwise, according to the terms hereof
and thereof (including interest which, but for the filing of a petition in
bankruptcy, would otherwise accrue on any such indebtedness, obligation, or
liability).  In case of failure by the
Company or other obligor punctually to pay any Obligations guaranteed hereby,
the Subsidiary hereby unconditionally agrees to make such payment or to cause
such payment to be made punctually as and when the same shall become due and
payable, whether at stated maturity, by acceleration, or otherwise, and as if
such payment were made by the Company or such obligor.

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

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

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

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

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

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

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

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

 13
 

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

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

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

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

 14
 

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

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

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

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

ARTICLE 9

REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT

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

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

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

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

 15
 

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

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

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

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

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

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

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

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

 16
 

the Obligations then outstanding and provision
for any contingent Obligations reasonably acceptable to the Purchaser.  Any such disposition which shall be a public
sale permitted by such requirements shall be made upon not less than 10 days’
written notice to each Debtor specifying the time and place of such sale and,
in the absence of applicable requirements of law, shall be by public auction
(which may, at the Purchaser’s option, be subject to reserve), after
publication of notice of such auction not less than 10 days prior thereto in
two newspapers in general circulation in Orange County, California.  To the extent permitted by any such
requirement of law, the Purchaser may bid for and become the purchaser of the
Collateral or any item thereof, offered for sale in accordance with this
Section without accountability to the Debtors. 
If, under mandatory requirements of applicable law, the Purchaser shall
be required to make disposition of the Collateral within a period of time which
does not permit the giving of notice to the Debtors as hereinabove specified,
the Purchaser need give the Debtors only such notice of disposition as shall be
reasonably practicable in view of such mandatory requirements of applicable
law.

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

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

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

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

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

 17
 

Section
9.4                                   Application
of Proceeds.

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

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

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

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

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

 18
 

order of the Debtors representing any dividend, payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.

ARTICLE 10

DEFINITIONS

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

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

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

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

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

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

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

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

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

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

 19
 

existing or hereafter incurred under, arising
out of or in connection with the Purchase Agreement as such relates to the
Junior Note and the due performance and compliance by the Debtors with the
terms of the Purchase Agreement as such relates to the Junior Note; (b) any and
all sums advanced by the Purchaser in accordance with the terms of this
Agreement or the Purchase Agreement in order to preserve the Collateral or
preserve their security interest in the Collateral; (c) in the event of any
proceeding for the collection or enforcement of any obligations or liabilities
referred to in clause (a), after an Event of Default shall have occurred and be
continuing, the reasonable expenses of re-taking, holding, preparing for sale
or lease, selling or otherwise disposing of or realizing on the Collateral, or
of any exercise by the Purchaser of its rights hereunder, together with
reasonable attorneys’ fees and court costs; and (d) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
this Agreement.

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

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

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

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

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

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

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

 20
 

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

ARTICLE 11

MISCELLANEOUS

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

(a)                                  if
to the Debtors:

DynTek, Inc.

19700 Fairchild
Road, Suite 230

Irvine, California
92612

Attention:
Chief Financial Officer

with a
copy to,

Stradling Yocca
Carlson & Rauth

660 Newport Center
Drive, Suite 1600

Newport Beach,
California 92660

Attention:
Christopher D. Ivey, Esq.

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

Paul N.
Silverstein, Esq.

Andrews Kurth LLP

450 Lexington
Avenue

New York, NY 10017

Fax:  (212) 850-2929

Tel:  (212) 850-2800

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

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

 21
 

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

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

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

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

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

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

 22
 

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

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

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

[Remainder of page left intentionally blank.]

 23
 

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

	
  

  	
  DEBTORS:

  
	
   

  	
   

  
	
   

  	
  DYNTEK,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Casper W.
  Zublin, Jr.

  	
   

  
	
   

  	
  Name: Casper W.
  Zublin, Jr.

  
	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
  DYNTEK
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Casper W.
  Zublin, Jr.

  	
   

  
	
   

  	
  Name: Casper W.
  Zublin, Jr.

  
	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  
	
  PURCHASER:

  	
   

  
	
   

  	
   

  
	
  TRUST
  A-4 - LLOYD I. MILLER

  	
   

  
	
   

  	
   

  
	
  By: PNC Bank,
  National Association,

  	
   

  
	
  as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Lloyd I.
  Miller, III

  	
   

  	
   

  
	
  Name: Lloyd I.
  Miller, III

  	
   

  
	
  Title:
  Investment Advisor to Trustee

  	
   

  
	
   

  
	
  Address:

  	
  4550 Gordon Drive

  
	
   

  	
  Naples, FL
  34102-7914

  
	
   

  	
  Fax: (239)
  263-8860

  
								

 

 24Exhibit
10.1

TENTH
AMENDMENT TO LOAN AND SECURITY AGREEMENT

This Tenth Amendment to Loan and Security Agreement
(this “Tenth Amendment”) made and entered into as of the 13th day of April,
2007, is by and among LASALLE
BANK NATIONAL ASSOCIATION, a national banking association (“LENDER”), having its
principal place of business at 135 South LaSalle Street, Chicago, Illinois
60603-4105, and VITA FOOD PRODUCTS,
INC., a Nevada corporation, with its chief executive office located
at 2222 West Lake Street, Chicago, Illinois 60612 (“Vita Food”), VIRGINIA HONEY COMPANY, INC.,
a Virginia corporation, with its chief executive office located at 2222 West
Lake Street, Chicago, Illinois 60612 (“Virginia Honey”), THE HALIFAX GROUP, INC., a Georgia corporation, with its
chief executive office located at 2222 West Lake Street, Chicago, Illinois
60612 (“Halifax”), and VITA
SPECIALTY FOODS, INC., a Delaware corporation, with its chief
executive office located at 2222 West Lake Street, Chicago, Illinois 60612  (“Specialty Foods”) (Vita Food, Virginia
Honey, Halifax and Specialty Foods are individually a “Borrower” and
collectively the “Borrowers”).

W
I T N E S S E T H:

WHEREAS, prior
hereto, Lender provided certain loans, extensions of credit and other financial
accommodations (the “Financial Accommodations”) to Borrowers pursuant to (a)
that certain Loan and Security Agreement dated as of September 5, 2003, as
amended by that certain First Amendment to Loan and Security Agreement dated as
of November 5, 2004, that certain Second Amendment to Loan and Security
Agreement dated as of December 21, 2004, that certain Third Amendment to Loan
and Security Agreement dated as of January 31, 2005, that certain Fourth
Amendment to Loan and Security Agreement dated as of April 4, 2005, that certain
Fifth Amendment to Loan and Security Agreement dated as of  June 30, 2005, that certain Sixth Amendment
to Loan and Security Agreement dated as of August 4, 2005, that certain Seventh
Amendment to Loan and Security Agreement dated as of August 30, 2005, that
certain Eighth Amendment to Loan and Security Agreement dated as of March 24,
2006, and that certain Ninth Amendment to Loan and Security Agreement dated as
of March 30, 2007, each by and among Lender and Borrowers (collectively the “Loan
Agreement”), and (b) the other documents, agreements and instruments referenced
in the Loan Agreement or executed and delivered pursuant thereto;

WHEREAS, Borrowers
have requested, among other things, that Lender (i) provide a new term loan in
the original principal amount of $1,000,000, and (ii) modify certain financial
covenants (collectively the “Additional Financial Accommodations”); and

WHEREAS, Lender is
willing to provide the Additional Financial Accommodations, but solely on the
terms and subject to the provisions set forth in this Tenth Amendment and the
other agreements, documents and instruments referenced herein or executed and
delivered pursuant hereto.

NOW, THEREFORE, in
consideration of the foregoing, the mutual promises and understandings of the
parties hereto set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender and Borrowers
hereby agree as set forth in this Tenth Amendment.

I.              Definitions.

A.            Use
of Defined Terms.  Except as expressly set forth in this Tenth
Amendment, all terms which have an initial capital letter where not required by
the rules of grammar are used herein as defined in the Loan Agreement.

B.            Amended
Definitions.  Effective as
of the date of this Tenth Amendment, Section 1.1 of the Loan Agreement is
hereby amended by deleting the definitions of “Liabilities” and “Loan or Loans”
and substituting therefor the following, respectively:

“Liabilities”:  shall mean any and all obligations,
liabilities, indebtedness, fees, costs and expenses, now or hereafter owed or
owing by Borrowers or any Borrower to Lender, or to any parent, affiliate or
subsidiary of Lender, of any and every kind and nature, including, but not
limited to, all principal, interest, debts, claims and indebtedness of any and
every kind and nature, howsoever created, arising or evidenced, whether primary
or secondary, direct or indirect, absolute or contingent, insured or uninsured,
liquidated or unliquidated, or otherwise, and whether arising or existing under
written or oral agreement or by operation of law, together with all costs, fees
and expenses of Lender arising hereunder, including, but not limited to, (1)
the indebtedness evidenced by the Revolving Note, Term Note A, Term Note B and
Term Note C, (2) reasonable attorneys’ and paralegals’ fees or charges relating
to the preparation of this Loan Agreement and the Other Agreements and the
enforcement of Lender’s rights and remedies pursuant to this Loan Agreement and
the Other Agreements, and (3) all liabilities and obligations arising under or
in connection with Rate Hedging Transactions.

“Loan or Loans”:
shall mean, individually and collectively, the Revolving Loan, Term Loan A,
Term Loan B, Term Loan C and any other loans provided by Lender to the
Borrowers from time to time.

C.            New
Definitions.  Effective as
of the date of this Tenth Amendment, Section 1.1 of the Loan Agreement is
hereby amended by adding the following new definitions thereto in the
appropriate alphabetical order:

“Term
Loan C”: shall have the meaning set forth in Section 2.1(D)
below.

“Term
Note C”: shall mean that certain Term Note C dated as of
April __, 2007, executed and delivered by Borrowers to Lender in the original
principal amount of $1,000,000.00, as amended, renewed, restated or replaced
from time to time.

II.            Amendments to Loan
Agreement.  Effective as
of the date of this Tenth Amendment, the Loan Agreement is hereby amended as
follows:

A.            Term Loan C.  A new subsection 2.1(D) is hereby added to
the Loan Agreement as follows:

 2
 

“(D)        Term Loan C.  Provided that an Unmatured Event of Default
or Event of Default does not then exist and all of the conditions precedent in
Section 10 of this Loan Agreement have been satisfied, Lender shall loan to
Borrower the principal amount of One Million and no/100 Dollars
($1,000,000.00), which loan shall be evidenced by and repaid in accordance with
Term Note C (“Term Loan C”).”

B.            Interest Rates.  Sections 2.2(C) and (D) of the Loan Agreement
are hereby amended by deleting Sections 2.2(C) and (D) of the Loan Agreement in
their entirety and substituting therefor the following Sections 2.2(C), (D),
and (E), respectively:

“(C)         Term Loan C.  Borrowers hereby jointly and severally
promise to pay interest on the unpaid principal amount of Term Loan C as
provided in Section 3.1 below at the floating per annum rate of interest equal
to the Prime Rate plus two percent (2%) per annum for the period commencing on
the date such Loan is disbursed until the date such Loan is paid in full.
Notwithstanding the foregoing, upon the occurrence and during the continuance
of an Event of Default, the unpaid principal amount of Term Loan C shall, at
Lender’s option, bear interest at the Default Rate.

(D)          Unused Line of Credit Fee.  Borrowers shall pay to Lender an unused line
of credit fee equal to the daily rate equivalent of one-quarter of one percent
per annum (1/4%) of the difference between the Maximum Revolving Loan and the
average daily balance of the sum of the Revolving Loan and the Letter of Credit
Obligations for each calendar quarter or part thereof, which fee shall be fully
earned by Lender and payable quarterly in arrears on the fifth (5th) Business
Day of each calendar quarter.  Said fee
shall be calculated on the basis of a 360-day year.

(E)           Letter of Credit Fees.  Prior to the issuance of each standby Letter
of Credit and on each annual anniversary of the issuance thereof, Borrowers
shall pay to Lender, a fee computed on a daily basis equal to the amount of
such Letter of Credit multiplied by one hundred fifty (150) basis points per
annum.  Prior to the issuance of each
documentary Letter of Credit, Borrowers shall remit to Lender a Letter of
Credit fee at the rate quoted by Lender to Borrowers at the time of issuance.  In addition, Borrowers shall pay to and/or
reimburse Lender for any costs, fees and expenses incurred by Lender in
connection with the application for, issuance of or amendment to any Letter of
Credit upon Lender’s demand therefor and any amounts not so paid shall bear
interest at the Default Rate until paid.”

C.            Payments.  Section 3.1(A) of the Loan Agreement is
hereby amended by deleting Section 3.1(A) of the Loan Agreement in its entirety
and substituting therefor the following:

“(A)        Scheduled
Payments.  Except
as otherwise provided in this Loan Agreement or the Other Agreements, that
portion of the Liabilities consisting of: (1) the principal portion of the
Revolving Loan shall be payable in full by Borrowers to Lender on or before the
Revolving Loan Termination Date; (2) interest on the Revolving Loan shall
be payable by Borrowers to Lender in arrears on the last Business Day of each
month, as debited by Lender; (3) principal on Term Loan A, Term Loan B and
Term Loan C shall be payable by Borrowers to Lender as set forth in Section 2
above and in Term Note A, Term Note B and Term Note C, respectively; (4)
interest on Term Loan A, Term Loan B and Term Loan C shall be payable by
Borrowers to Lender in arrears on the last Business Day of each month 

 3
 

as debited by Lender; (5)
all costs, fees and expenses payable pursuant to this Loan Agreement and the
Other Agreements shall be payable by Borrowers to Lender, or to such other
Persons designated by Lender, on demand; and (6) the balance of the
Liabilities, if any, shall be payable by Borrowers to Lender on demand.  All such payments to Lender shall be payable
at Lender’s principal office in Chicago, Illinois, or at such other place or
places as Lender may designate in writing to Borrowers.  All such payments to Persons other than
Lender shall be payable at such place or places as Lender may designate in
writing to Borrowers.  All such payments
made to Lender shall be paid by Borrowers without offset or other reduction.”

D.            Notes. 
Section 3.3 of the Loan Agreement is hereby amended by deleting Section
3.3 in its entirety and substituting therefor the following:

“3.3         Notes.  Loans made by Lender to Borrowers pursuant to
this Loan Agreement may or may not, at Lender’s discretion, be evidenced by
notes or other instruments issued or executed and delivered by Borrowers to
Lender, including, but not limited to, the Revolving Note, Term Note A, Term
Note B and Term Note C.  Where such Loans
are not so evidenced, such Loans shall be evidenced by entries upon the
ledgers, books, records or computer records of Lender maintained for that
purpose.  Lender’s failure to record any
portion of the Liabilities on such books and records shall not limit or
otherwise affect the obligations and liabilities of Borrowers to repay the
Liabilities due and owing to Lender pursuant to this Loan Agreement and the
Other Agreements.”

E.             Financial Covenants.  Section 9.4 of the Loan Agreement is hereby
amended by deleting Section 9.4 of the Loan Agreement in its entirety and
substituting therefor the following:

“9.4                Financial Covenants.  During the term of this Loan Agreement, and
thereafter for so long as there are any outstanding Liabilities owed to Lender,
Borrowers covenant that they shall:

(A)  Cash Flow Coverage Ratio.  Not permit Borrowers’ Cash Flow Coverage
Ratio, calculated on a year to date basis, to be less than: (i) .40 to 1.00 as
of June 30, 2007, (ii) .20 to 1.00 as of September 30, 2007, or (iii) .30 to
1.00 as of December 31, 2007, or as of the last day of any calendar quarter
thereafter.  The Cash Flow Coverage Ratio
will not be tested as of March 31, 2007.

(B)   Minimum EBITDA.  Borrowers shall maintain EBITDA of not less
than: (i) One Million Four Hundred Fifty Thousand and no/100 Dollars
($1,450,000.00) for the six (6) month period ending June 30, 2007, (ii) Two
Million One Hundred Thirty-Five Thousand and no/100 Dollars ($2,135,000.00) for
the nine-month period ending  September
30, 2007, and (iii) Three Million One Hundred Twenty Thousand and no/100
Dollars ($3,120,000.00) as of December 31, 2007 and as of the last day of each
calendar quarter thereafter, calculated on a trailing twelve (12) month
basis.  The Minimum EBITDA covenant will
not be tested as of March 31, 2007.”

III.           Conditions
Precedent. Lender’s obligation to provide the Additional
Financial Accommodations to Borrowers is subject to the full and timely
performance of the following 

 4
 

covenants prior to
or contemporaneously with the execution of this Tenth Amendment:

A.            Borrowers executing and delivering,
or causing to be executed and delivered to Lender, the following documents,
each of which shall be in form and substance acceptable to Lender:

(i)                                     an
original Term Note C of even date herewith executed by the Borrowers to Lender;

(ii)                                  an
original Company General Certificate of even date herewith executed by the
Secretary of each Borrower to Lender;

(iii)                             an
original Second Amendment to Mortgage Documents of even date herewith by and
between Vita Foods and Lender; and

(iv)                              such
other agreements, documents and instruments as Lender may reasonably request;

B.            No Unmatured Event of Default or
Event of Default exists under the Loan Agreement, as amended by this Tenth
Amendment, or the Other Agreements;

C.            No claims, litigation, arbitration
proceedings or governmental proceedings not disclosed in writing to Lender
prior to the date of hereof shall be pending or known to be threatened against
Borrowers and no known material development not so disclosed shall have
occurred in any claims, litigation, arbitration proceedings or governmental
proceedings so disclosed which in the opinion of Lender is likely to materially
or adversely affect the financial position or business of any Borrower or the
capability of any Borrower to pay its obligations and liabilities to Lender;
and

D.            There shall have been no material or
adverse change in the business, financial condition or results of operations
since the date of each Borrower’s most recently delivered financial statements
to Lender.

IV.           Conflict.  If, and to the extent, the terms and
provisions of this Tenth Amendment contradict or conflict with the terms and
provisions of the Loan Agreement, the terms and provisions of this Tenth
Amendment shall govern and control; provided, however, to the extent the terms
and provisions of this Tenth Amendment do not contradict or conflict with the
terms and provisions of the Loan Agreement, the Loan Agreement, as amended by
this Tenth Amendment, shall remain in and have its intended full force and
effect, and Lender and Borrowers hereby affirm, confirm and ratify the same.

V.            Severability.
 Wherever possible, each provision of
this Tenth Amendment shall be interpreted in such manner as to be valid and
enforceable under applicable law, but if any provision of this Tenth Amendment
is held to be invalid or unenforceable by a court of competent jurisdiction,
such provision shall be severed herefrom and such invalidity or
unenforceability shall not affect any other provision of this Tenth Amendment,
the balance of which shall remain in and have its intended full force and
effect.  Provided, however, if such
provision may be modified so as to be valid and enforceable as a matter of law,
such provision shall be deemed to be modified so as to be valid and enforceable
to the maximum extent permitted by law.

 5
 

VI.           Reaffirmation.  Borrowers hereby reaffirm and remake all of
the representations, warranties, covenants, duties, obligations and liabilities
contained in the Loan Agreement, as amended hereby.

VII.          Fees, Costs and Expenses.

(A)          Contemporaneously herewith, Borrowers
shall pay to Lender a fully-earned, non-refundable commitment fee for Term Loan
C in the amount of $20,000.00.

(B)           Borrowers agree to pay, upon demand,
all fees, costs and expenses of Lender, including, but not limited to,
reasonable attorneys’ fees, in connection with the preparation, execution,
delivery and administration of this Tenth Amendment and the other agreements,
documents and instruments executed and delivered in connection herewith or
pursuant hereto.

VIII.        Choice
of Law.  This Tenth
Amendment has been delivered and accepted in Chicago, Illinois, and shall be
governed by and construed in accordance with the laws of the State of Illinois,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law as to all matters, including matters of validity,
construction, effect, performance and remedies.

IX.           Counterpart.  This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

X.            Waiver
of Jury Trial.  BORROWERS
AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY.

[signature page follows]

 6
 

IN WITNESS
WHEREOF, Lender and Borrowers have caused this Tenth
Amendment to be executed and delivered by their duly authorized officers as of
the date first set forth above.

	
  LASALLE BANK NATIONAL ASSOCIATION,

  	
  VITA FOOD PRODUCTS, INC.,

  
	
  a national
  banking association

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Steven
  Buford

  	
   

  	
  By:

  	
  /s/ Clifford Bolen

  
	
  Name:

  	
  Steven Buford

  	
   

  	
  Name:

  	
  Clifford K. Bolen

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  VIRGINIA HONEY
  COMPANY, INC.,

  
	
   

  	
   

  	
  a Virginia corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Clifford Bolen

  
	
   

  	
   

  	
  Name:

  	
  Clifford K. Bolen

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE HALIFAX GROUP,
  INC.,

  
	
   

  	
   

  	
  a Georgia corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Clifford Bolen

  
	
   

  	
   

  	
  Name:

  	
  Clifford K. Bolen

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  VITA SPECIALTY
  FOODS, INC.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Clifford Bolen

  
	
   

  	
   

  	
  Name:

  	
  Clifford K. Bolen

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
						

 

 7

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