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Exhibit 10.46
 
 
AMENDMENT TO SERIES J WARRANT TO PURCHASE SHARES OF PREFERRED STOCK OF BPO
MANAGEMENT SERVICES, INC.
 
This Amendment to Series J Warrant to Purchase Shares of Preferred Stock of BPO
Management Services, Inc. (this “Amendment”) is effective as of September __,
2007, by BPO Management Services, Inc., a Delaware corporation (“Issuer”), in
favor of ____________________ (“Holder”).  Issuer and Holder are, together, the
“Parties.”
 
RECITALS
 
WHEREAS, Issuer previously granted to Holder that certain Series J Warrant to
Purchase Shares of Preferred Stock of Issuer, which was numbered W-J-07-__, was
dated and issued June 13, 2007 (the “Series J Warrant”), and entitled Holder to
exercise the Series J Warrant in accordance with the terms contained therein for
the purchase of up to ___________ shares of Issuer’s Series D-2 Convertible
Preferred Stock (the “Series J Covered Shares”) at an initial per-share Warrant
Price (as defined in Section 9 of the Series J Warrant) of $14.40 (the “Series J
Original Warrant Price”);
 
WHEREAS, Issuer also previously granted to Holder (a) that certain Series A
Warrant to Purchase Shares of Common Stock of Issuer, which was numbered
W-A-07-__, was dated and issued June 13, 2007 (the “Series A Warrant”), and
entitled Holder to exercise the Series A Warrant in accordance with the terms
contained therein for the purchase of up to ________ shares of Issuer’s Common
Stock at an initial per-share Warrant Price (as defined in Section 9 of the
Series A Warrant) of $0.90; (b) that certain Series B Warrant to Purchase Shares
of Common Stock of Issuer, which was numbered W-B-07-__, was dated and issued
June 13, 2007 (the “Series B Warrant”), and entitled Holder to exercise the
Series B Warrant in accordance with the terms contained therein for the purchase
of up to ___________ shares of Issuer’s Common Stock at an initial per-share
Warrant Price (as defined in Section 9 of the Series B Warrant) of $1.25; (c)
that certain Series C Warrant to Purchase Shares of Common Stock of Issuer,
which was numbered W-C-07-__, was dated and issued June 13, 2007 (the “Series C
Warrant”), and entitled Holder to exercise the Series C Warrant in accordance
with the terms contained therein for the purchase of up to ___________ shares of
Issuer’s Common Stock (the “Series C Covered Shares”) at an initial per-share
Warrant Price (as defined in Section 9 of the Series C Warrant) of $1.35 (the
“Series C Original Warrant Price”); and (d) that certain Series D Warrant to
Purchase Shares of Common Stock of Issuer, which was numbered W-D-07-__, was
dated and issued June 13, 2007 (the “Series D Warrant” and together with the
Series J Warrant, the Series A Warrant, the Series B Warrant, and the Series C
Warrant, the “Warrants”), and entitled Holder to exercise the Series D Warrant
in accordance with the terms contained therein for the purchase of up to
___________ shares of Issuer’s Common Stock (the “Series D Covered Shares”) at
an initial per-share Warrant Price (as defined in Section 9 of the Series D
Warrant) of $1.87 (the “Series D Original Warrant Price”);
 
WHEREAS, Issuer has determined that, in lieu of procuring mezzanine level
financing from otherwise unaffiliated third parties (as originally contemplated
by such parties) in order to finance the potential acquisition by Issuer of a
private entity providing data center outsourcing services to clients located
throughout the United States for more than 10 years (the “Potential
Acquisition”), it will provide an enhanced opportunity to obtain such financing
from Holder and certain other parties who received warrants at the same time and
on the same terms as the Warrants (the “Other Warrant Holders”), by offering a
reduction to the Series J Original Warrant Price for up to 75% of the Series J
Covered Shares, which reduction shall be available until October 10, 2007;
 

 

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WHEREAS, Issuer has agreed that, since it believes it will be able to obtain the
funds it needs to complete the Potential Acquisition (if Issuer determines to
proceed with such Potential Acquisition) from the exercise of Series J Warrants
held by Holder and Other Warrant Holders, it has concluded that it will not need
to and, therefore, will not enter into, create, incur, assume, guarantee or
suffer to exist any Indebtedness (as defined in that certain Series D
Convertible Preferred Stock Purchase Agreement dated as of June 13, 2007, among
Issuer, Holder and Other Warrant Holders (the “Purchase Agreement”)), except as
listed on Schedule 2.1(k) to the Purchase Agreement;
 
WHEREAS, in furtherance of the foregoing, Issuer has also determined that, in
the event that Holder exercises any portion of the Series J Covered Shares
affected by such reduction to the Series J Original Warrant Price, the Series C
Original Warrant Price and Series D Original Warrant Price shall be reduced by
amendments to the Series C Warrant and the Series D Warrant  effective for the
remainder of the term of the Series C Warrant and the Series D Warrant,
respectively, to $0.01 per share and $1.10 per share, respectively, for the same
percentage of the Series C Covered Shares and Series D Covered Shares as the
percentage of such Series J Covered Shares exercised between the date hereof and
October 10, 2007 (i.e., if Holder exercises one-quarter (1/4) of the Series J
Covered Shares during said period, the Series C Original Warrant Price and the
Series D Original Warrant Price shall be reduced as described herein for
one-quarter (1/4) of the Series C Covered Shares and Series D Covered Shares);
 
WHEREAS, Section 11 of the Series J Warrant requires that the Series J Warrant
may only be amended by written instrument(s) executed by Issuer and the holders
of warrants exercisable for a majority of the shares of Series D-2 Convertible
Preferred Stock of Issuer issuable upon exercise of the then-outstanding Series
J Warrants issued to Holder and the Other Warrant Holders (the “Majority
Holders”);
 
WHEREAS, Issuer shall be deemed to have obtained the signature of the Majority
Holders upon its receipt of signed acknowledgements to this Amendment and/or the
amendments provided to the Other Warrant Holders representing the requisite
number of covered shares and, if Holder has not provided its signed
acknowledgement to this Amendment by the time Issuer has obtained the written
consent of the Majority Holders, Holder’s signature shall only be required to
evidence its agreement that this Amendment and the other amendments referenced
herein do not trigger the anti-dilution protection set forth in the Warrants;
and
 
WHEREAS, the Parties desire to amend the Series J Warrant to memorialize this
understanding and to execute amendments to the Series C Warrant and the Series D
Warrant (in form and substance which is substantially similar to this
Amendment).
 
NOW, THEREFORE, in consideration of the promises and covenants made herein, and
for such other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:
 

 
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ARTICLE 1
AMENDMENT

1.           Amendment; Covenant.
 
1.1           Amendment to Series J Warrant.  Effective solely for any exercise
by Holder of up to seventy-five percent (75%) of the Series J Covered Shares
(i.e., up to ________ shares of Issuer’s Series D-2 Convertible Preferred Stock)
(collectively, the “Amended Warrant Price Shares”) occurring during the period
commencing on the date hereof and ending on October 10, 2007 (the “Amendment
Effective Period”), the “Warrant Price” specified in Section 9 of the Series J
Warrant shall be $9.60 per share of such Covered Shares.  With respect to those
Amended Warrant Price Shares that were not purchased through the exercise of the
Series J Warrant during the Amendment Effective Period, immediately upon
expiration thereof and without any further act of the Parties, the Series J
Original Warrant Price shall be reinstated to such unpurchased Amended Warrant
Price Shares and thereafter apply to all Series J Covered Shares and this
Amendment shall be of no further force and effect.  Issuer hereby represents
that, concurrently with the delivery of this Amendment to Holder, it is
delivering to each of the Other Warrant Holders an amendment to its respective
outstanding Series J Warrant for its consideration and acceptance, which
amendment is identical to this Amendment in form and substance.  Accordingly,
the Parties agree that any exercise of the Warrants held by the Other Warrant
Holders at the prices contained herein shall not be deemed to trigger, or give
rise to the triggering of, any anti-dilution protection contained in the
Warrants.
 
1.2           Covenant.  Issuer hereby covenants and agrees that, since it
believes it will be able to obtain the funds it needs to complete the Potential
Acquisition (if Issuer determines to proceed with such Potential Acquisition)
from the exercise of Series J Warrants held by Holder and Other Warrant Holders,
it will not enter into, create, incur, assume, guarantee or suffer to exist any
Indebtedness (as defined in the Purchase Agreement), except as listed on
Schedule 2.1(k) to the Purchase Agreement.
 
ARTICLE 2
MISCELLANEOUS PROVISIONS
 
2.           Miscellaneous Provisions.
 
2.1           No Further Amendments.  Except as amended by this Amendment, the
Series J Warrant remains unmodified and in full force and effect.  In the event
of any inconsistency between the provisions of the Series J Warrant and the
provisions of this Amendment, the provisions of this Amendment shall
prevail.  This Amendment may only be modified or amended by a written agreement
executed by Issuer, and consented to by Holder, with the same formalities and in
the same manner as this Amendment.
 

 
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2.2           Counterparts.  This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which when
taken together shall constitute one and the same instrument.  Facsimiles or
portable document files transmitted by e-mail containing original signatures
shall be deemed for all purposes to be originally signed copies of the documents
which are the subject of such facsimiles or files.
 
2.3           Binding on Successors. This Amendment shall be binding upon and
shall inure to the benefit of the successors and permitted assigns of the
Parties.
 
2.4           Entire Agreement.  The Series J Warrant as amended by this
Amendment contains the entire understanding between the Parties and supersedes
any prior written or oral agreements between them respecting the subject matter
contained herein.  There are no representations, agreements, arrangements or
understandings, oral or written, between the Parties relating to the subject
matter hereof that are not fully expressed herein.
 

 

 
[SIGNATURE PAGE TO FOLLOW]
 

 
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IN WITNESS WHEREOF, the Parties hereto have executed or have caused a duly
authorized officer to execute this Amendment all effective as of the day and
year first above written.
 
ISSUER:
         
BPO MANAGEMENT SERVICES, INC.,
a Delaware corporation
         
By:     ______________________________
Name: Patrick A. Dolan
Its:      Chief Executive Officer
               
Amendment is acknowledged and consented to:
 
   
HOLDER:
               
By:     ______________________________
Name:
Its:
   

 
 
 
 
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