Exhibit 10.3
 
THIS WARRANT AND THE SHARES OF PREFERRED STOCK WHICH MAY BE PURCHASED PURSUANT
TO THE EXERCISE OF THIS WARRANT (AND THE SHARES OF COMMON STOCK WHICH MAY BE
ISSUED UPON CONVERSION OF SUCH SHARES OF PREFERRED STOCK) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND THE
RULES AND REGULATIONS THEREUNDER.
 
THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO THE TERMS AND CONDITIONS OF
AN AMENDED AND RESTATED SHAREHOLDERS AGREEMENT WHICH MAY PLACE CERTAIN
RESTRICTIONS ON THE VOTING OF SUCH SECURITIES (INCLUDING THE GRANT OF AN
IRREVOCABLE PROXY RELATIVE TO VOTING MATTERS).  A COPY OF SUCH AGREEMENT WILL BE
FURNISHED TO THE RECORD HOLDER OF THIS SECURITY WITHOUT CHARGE UPON WRITTEN
REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.
 

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No. W-P1
Void After Expiration Date
(as defined below)

WARRANT

TO PURCHASE PREFERRED STOCK OF

MTM TECHNOLOGIES, INC.

Dated February 28,  2008

THIS WARRANT CERTIFIES THAT, for value received, PEQUOT PRIVATE EQUITY FUND III,
L.P. or its permitted transferees (the “Holder”) is entitled to purchase from
MTM TECHNOLOGIES, INC., a New York corporation (the “Company”), up to the number
of fully paid and nonassessable shares (the “Shares”) of the next series of
preferred stock, $.001 par value, per share of the Company, to be designated by
the Company after the date hereof, (“Preferred Stock”), as further described and
defined below.
 
Section  1.  Number of Shares.  The maximum number of Preferred Stock which may
be purchased upon the exercise of this Warrant is 343,705. This Warrant shall
not be exercised prior to the date upon which the Company designates the next
series of preferred stock.

Section  2.  Exercise Price.  The price per share at which the Holder may
purchase the Preferred Stock shall be$.6375 per share (the “Exercise Price”).

Section  3.  Expiration Date.  This Warrant shall expire at 5:00 p.m. New York
Time on March 29, 2012 (the “Expiration Date”).  On the Expiration Date, all
rights of the Holder to purchase Preferred Stock pursuant to this Warrant shall
immediately terminate.

Section  4.  Exercise and Payment.
 
Section  4.1  Exercise. The purchase rights represented by this Warrant may be
exercised by the Holder, in whole or in part at any time, by the surrender of
this Warrant (together with a duly executed notice of exercise in the form
attached hereto as Exhibit A-1) at the principal office of the Company, and by
the payment to the Company, by wire transfer of immediately available funds, of
an amount equal to the aggregate Exercise Price of the Shares being purchased.

Section  4.2  Net Issue Election.  The Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares equal to the value
of this Warrant or any portion hereof by the surrender of this Warrant or such
portion (together with a duly executed notice of exercise in the form attached
hereto as Exhibit A-2) at the principal office of the Company.  Thereupon, the
Company shall issue to the Holder such number of shares of Preferred Stock as is
computed using the following formula:
 
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X = Y (A-B)
A
 
Where

 
X =
the number of shares of Preferred Stock to be issued to the Holder pursuant to
this Section  4.2.

 
 
Y =
the number of shares of Preferred Stock covered by this Warrant in respect of
which the net issue election is made pursuant to this Section  4.2.

 
A =
the Fair Market Value of one share of Preferred Stock, as determined in
accordance with Section  6 herein, as at the time the net issue election is made
pursuant to this Section  4.2.

 
B =
the Exercise Price in effect under this Warrant at the time the net issue
election is made pursuant to this Section  4.2.

Section  4.3  Stock Certificates.  In the event of the exercise of all or any
portion of this Warrant, certificates for the shares of Preferred Stock so
purchased shall be delivered to the Holder by the Company at the Company's own
expense (including the payment by the Company of any applicable issue taxes or
governmental charges imposed in connection with the issuance or delivery of the
Preferred Stock) within a reasonable time, which shall in no event be later than
ten (10) days thereafter and, unless this Warrant has been fully exercised or
has expired, a new Warrant representing the Shares with respect to which this
Warrant shall not have been exercised shall also be issued to the Holder within
such time.
 
If this Warrant shall be surrendered for exercise within any period during which
the transfer books for shares of the Preferred Stock or other securities
purchasable upon the exercise of this Warrant are closed for any purpose, the
Company shall not be required to make delivery of certificates for the
securities purchasable upon such exercise until the date of the reopening of
said transfer books.

Section  5.  Stock Fully Paid; Reservation of Shares.  All of the Shares
issuable upon the exercise of this Warrant will, upon issuance and receipt of
the Exercise Price therefor, be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership thereof, and
free and clear of all taxes, liens, encumbrances and charges with respect to the
issue thereof.  During the period within which this Warrant may be exercised,
the Company shall at all times have authorized and reserved for issuance
sufficient shares of its Preferred Stock to provide for the exercise of this
Warrant.

Section  6.  Adjustment of Exercise Price and Number of Shares.  The number and
kind of securities purchasable upon the exercise of this Warrant and the
Exercise Price therefor shall be subject to adjustment from time to time upon
the occurrence of certain events, as follows:
 
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Section  6.1  Adjustments for Subdivisions of Preferred Stock.  If the number of
shares of Preferred Stock outstanding at any time is increased by a stock
dividend payable in shares of Preferred Stock or by a subdivision or split up of
stock, then the Exercise Price then in effect shall, concurrently with the
effectiveness of such dividend, subdivision or split up, be proportionately
decreased and the number of shares of Preferred Stock issuable upon exercise of
this Warrant shall be increased in proportion to such increase of outstanding
shares of Preferred Stock.

Section  6.2  Adjustments for Combinations Preferred Stock.  If the number of
shares of Preferred Stock outstanding at any time is decreased by a combination
of the outstanding shares of Preferred Stock, then the Exercise Price then in
effect shall, concurrently with the effectiveness of such combination, be
proportionately increased and the number of shares of Preferred Stock issuable
upon exercise of this Warrant shall be decreased in proportion to such decrease
in outstanding shares of Preferred Stock.

Section  6.3  Adjustments for Reclassification, Exchange and Substitution.  Upon
a Notice Event (as defined below), if the Preferred Stock issuable upon exercise
of this Warrant shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital reorganization,
merger, reclassification or otherwise (other than a subdivision or combination
of shares provided for above) this Warrant shall thereafter be exercisable into,
in lieu of the number of shares of Preferred Stock which the Holder would
otherwise have been entitled to receive, a number of shares of such other class
or classes of stock equivalent to the number of shares of Preferred Stock that
would have been subject to receipt by the Holder upon exercise of this Warrant
immediately before that change.

Section  6.4  Notice of Certain Events. In the event (each, a “Notice
Event”):  (a) the Company authorizes the issuance to all holders of Common Stock
and/or Preferred Stock rights or warrants to subscribe for or purchase shares of
its capital stock, or any other subscription rights or warrants; (b) the Company
authorizes the distribution to all holders of Common Stock and/or Preferred
Stock evidences of indebtedness or assets or other securities; (c) of any
capital reorganization or reclassification of Common Stock and/or Preferred
Stock, other than a subdivision or combination of the outstanding Common Stock
and/or Preferred Stock and other than a change in par value of the Common Stock
and/or Preferred Stock; (d) of any liquidation or merger to which the Company is
a party and for which approval of any of the Company's holders of Common Stock
and/or Preferred Stock is required, other than a consolidation or merger in
which the Company is the continuing corporation and that does not result in any
reclassification or change of the shares of Preferred Stock issuable upon the
exercise of this Warrant; (e) of the conveyance or transfer of the Company's
properties and assets, substantially as an entirety; or (f) of the Company's
voluntary or involuntary dissolution, liquidation or winding-up; then, in each
case, the Company shall cause to be mailed by certified mail to the Holder, at
least 10 days prior to the applicable record or effective date hereinafter
 
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specified, a notice stating the material terms relating to the exercise of the
Warrants, the name, title and telephone number of a Company representative who
shall be available to answer any questions relating to such exercise and the
dates as of which (i) the holders of Common Stock and/or Preferred Stock of
record will be entitled to receive any such rights, warrants or distributions
are to be determined, (ii) such Notice Event is expected to become effective and
(iii) that Holders of record of Warrants shall be entitled to exchange or sell
their shares of Preferred Stock issuable upon the exercise of this Warrant for
securities or other property, if any, deliverable upon such Notice Event.  In
addition, if the Company receives written notice that a purchase, tender or
exchange offer has been made to the holders of more than 50% of the outstanding
Common Stock and/or Preferred Stock, the Company shall give the Holder
reasonable notice (but will not be required to give not more than 10 days
notice) thereof.

Section  7.  Fractional Shares.  No fractional shares of Preferred Stock will be
issued in connection with any exercise hereunder.  In lieu of such fractional
shares the Company shall make a cash payment therefor based upon the fair market
value of the Preferred Stock on such date as determined by the board of
directors of the Company (the “Board of Directors”).

Section  8.  Preemptive Rights.

(a)    Each Holder shall be entitled to purchase its pro rata share (calculated
by multiplying the number of securities to be issued in such equity offering
including those issued pursuant to this Section 8 by a fraction, the numerator
of which is the number of shares of Common Stock held by such holder on a Fully
Diluted Basis and the denominator of which is the number of shares of Common
Stock held by all such holders of securities of the Corporation on a Fully
Diluted Basis) of any future private equity offering by the Corporation.  "Fully
Diluted Basis" means when used in reference to the number of shares of Common
Stock held by a Person at any time, a number of shares of Common Stock equal to
the sum of (x) the number of issued and outstanding shares of Common Stock then
held by or such Person, plus (y) the total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all warrants or other
rights to subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable for
Common Stock (such warrants, rights or options being called “Options” and such
convertible or exchangeable stock or securities being called “Convertible
Securities”) issued and outstanding at such time that are then held by such
Person.

(b)    Notwithstanding anything contained in Section 8(a) to the contrary, the
preemptive rights of the Holder shall not apply to (a) shares of Common Stock
sold to, or options to purchase Common Stock granted by the Company to,
employees, consultants, officers, or directors of the Company pursuant to any
option plan, agreement or other arrangement duly adopted by the Company and
approved by a majority of the Board of Directors; (b) any shares of Common Stock
upon the conversion of shares of Series A Preferred Stock; (c) any shares of
Common Stock pursuant to which the Series A Conversion Price (as such term is
defined in the Company’s Certificate of Incorporation)
 
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is adjusted under Section 6; (d) any shares of Common Stock issued pursuant to
the exchange, conversion or exercise of any Options or Convertible Securities
that have previously been incorporated into computations hereunder on the date
when such Options or Convertible Securities were issued; (e) the issuance and
sale of securities in connection with a strategic investment or similar
transaction approved by a majority of the Board of Directors; (f) securities
issued for consideration other than cash pursuant to a merger, consolidation or
similar business combination or acquisition of assets as approved by a majority
of the Board of Directors; (g) the issuance of shares in connection with a firm
commitment underwritten public offering of Common Stock with a nationally
recognized investment banking firm at a price per share offered to the public of
at least $5.00 per share of Common Stock which results in gross cash proceeds to
the Company of at least $25,000,000; (h) any shares of Series A Preferred Stock
issued in the form of a dividend to any holder of Series A Preferred Stock; and
(i) any shares of Common Stock issued on exercise of any warrants issued by the
Company, on or prior to the date of issuance of this Warrant and warrants issued
in connection with subordinated debt of the Company outstanding on the date of
issuance of this Warrant.

Section  9.  Restrictions on Transfer.
 
Section  9.1  Transfer.  The Holder may transfer this Warrant and the shares of
Preferred Stock issuable upon exercise of this Warrant, and the rights and
obligations attached thereto, so long as any such transfer(s) comply with
applicable securities laws

Section  9.2  Restrictive Legend.  Unless a registration statement is in effect
with respect thereto, each certificate representing (i) the Shares and (ii) any
other securities issued in respect of the Shares upon any stock split, stock
dividend or recapitalization (collectively, the “Restricted Securities”), shall
be endorsed as follows:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER.
 
THIS SECURITY MAY BE SUBJECT TO THE TERMS AND CONDITIONS OF AN AMENDED AND
RESTATED SHAREHOLDERS AGREEMENT WHICH MAY PLACE CERTAIN RESTRICTIONS ON THE
VOTING OF SUCH SECURITIES (INCLUDING THE GRANT OF AN IRREVOCABLE PROXY RELATIVE
TO VOTING MATTERS).  A COPY OF SUCH AGREEMENT WILL BE FURNISHED TO THE RECORD
HOLDER OF THIS SECURITY WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT
ITS PRINCIPAL PLACE OF BUSINESS.
 
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Section  10.  No Rights of Stockholders.  This Warrant does not entitle the
Holder to any voting rights as a stockholder of the Company prior to the
exercise of the Warrant.  Nothing in this Warrant shall obligate the Holder to
exercise this Warrant, it being understood that the decision as to whether to
exercise the Warrant shall be made exclusively by the Holder.

Section  11.  No Impairment.  The Company will not, by amendment of its
Certificate of Incorporation, as amended and restated, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but it will at all times in good faith assist in the
carrying out of all of the provisions of this Warrant and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder of this Warrant against impairment.

Section  12.  Loss, Theft, Destruction or Mutilation of Warrant.  Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new Warrant of like tenor and dated as of such cancellation, in
lieu of this Warrant.

Section  13.  Saturdays, Sundays, Holidays, etc.  If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.

Section  14.  Miscellaneous.
 
Section  14.1  Governing Law.  This Warrant shall be governed by and construed
in all respects in accordance with the laws of the State of New York, without
giving effect to the conflicts of laws provisions thereof.

Section  14.2  Entire Agreement; Amendment.  Each party hereby acknowledges that
no other party or any other person or entity has made any promises, warranties,
understandings or representations whatsoever, express or implied, not contained
in this Warrant and acknowledges that it has not executed this Warrant in
reliance upon any such promises, representations, understandings or warranties
not contained herein and that this Warrant supersede all prior agreements and
understandings between the parties with respect thereto.  There are no promises,
covenants or undertakings other than those expressly set forth or provided for
in this Warrant.  Neither this Warrant nor any term hereof may be amended,
waived, discharged, or terminated other than by a written instrument signed by
the parties hereto.
 
Section  14.3  Successors and Assigns.  Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
permitted successors and assigns, heirs, executors, and administrators of the
Company and the Holder.
 
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Section  14.4  Severability.  Whenever possible, each provision of this Warrant
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Warrant will be
reformed, construed and enforced in such jurisdiction to the greatest extent
possible to carry out the intentions of the parties hereto.
 
Section  14.5  Notices, etc.  All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, by overnight courier, or otherwise delivered by
hand or by messenger or sent by facsimile and confirmed by mail, addressed:
 
(i)         if to the Company, at to MTM Technologies, Inc., 1200 High Ridge
Road, Stamford, Connecticut 06905, Attention: Chief Executive Officer; and

(ii)        if to the Holder, c/o Pequot Capital Management, Inc., 500 Nyala
Farm Road, Westport, Connecticut 06880.

All notices shall be effective upon receipt.
 
Section  14.6  Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

Section  14.7  Titles and Subtitles.  The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
 
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IN WITNESS WHEREOF, the undersigned have executed this Warrant as of the date
first above written.

 
MTM TECHNOLOGIES, INC.
 
 
 
By:
/s/ Steve Stringer    
Name: Steve Stringer
Title:   President and Chief Operating Officer

Signature Page to Pequot Private Equity Fund III, L.P. Warrant

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WARRANT HOLDER:
 
PEQUOT PRIVATE EQUITY FUND III, L.P.
 
 
By:
Pequot Capital Management, Inc.,
its Investment Manager
 
 
   
By:
/s/ Carlos Rodrigues      
Name:  Carlos Rodrigues
Title:    Chief Financial Officer
 

Signature Page to Pequot Private Equity Fund III, L.P. Warrant

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THE EXERCISE OF THIS WARRANT IS SUBJECT TO THE APPLICABLE
PROVISIONS OF THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED

EXHIBIT A-1

NOTICE OF EXERCISE

 
 
TO:
MTM Technologies, Inc.

 
1200 High Ridge Road

 
Stamford, Connecticut 06905

 
Attention: Chief Executive Officer

1.  The undersigned hereby elects to purchase _________ shares of Preferred
Stock, par value $.001 per share, of MTM TECHNOLOGIES, INC. pursuant to the
terms of this Warrant, and tenders herewith payment of the purchase price of
such shares in full.

2.  Please issue a certificate or certificates representing said shares of
Preferred Stock in the name of the undersigned or in such other name as is
specified below:

______________________________
(Name)
______________________________

______________________________
(Address)

 
___________________________________
(Signature)          
Title:_______________________________

__________________________
(Date)

A-1

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THE EXERCISE OF THIS WARRANT IS SUBJECT TO THE APPLICABLE
PROVISIONS OF THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED

EXHIBIT A-2

NET ISSUE NOTICE OF EXERCISE

 
 
TO:
MTM Technologies, Inc.

 
1200 High Ridge Road

 
Stamford, Connecticut 06905

 
Attention: Chief Executive Officer

 
1.   The undersigned hereby elects to purchase _________ shares of Preferred
Stock, par value $.001 per share, of MTM TECHNOLOGIES, INC. pursuant to the
terms of this Warrant, and hereby elects under Section 4.2 of this Warrant to
surrender the right to purchase _______ shares of Preferred Stock pursuant to
this Warrant for a net issue exercise with respect to ________ shares of
Preferred Stock.

2.   Please issue a certificate or certificates representing said shares of
Preferred Stock in the name of the undersigned or in such other name as is
specified below:

______________________________
(Name)
______________________________

______________________________
(Address)

___________________________________
(Signature)          

Title:_______________________________

_______________________
                   (Date)
 
A-2

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EXHIBIT B

ASSIGNMENT FORM
(To be signed only upon transfer of Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
______________________________, whose address is _____________________, the
right represented by the attached Warrant to purchase _________ shares of
Preferred Stock of MTM TECHNOLOGIES, INC., to which the attached Warrant
relates.
 
Dated:____________________
 

 
____________________________________
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
 
 
 
____________________________________
(Address)

Signed in the presence of:

_____________________________
 
B-1

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