Exhibit 10.02

WARRANT NO. PSP 1

 

To Purchase 1,339,286 Shares of Common Stock

of

ZAMBA CORPORATION

 

This Warrant and the Securities issuable upon exercise of this Warrant have not
been registered under the Securities Act of 1933 (the “1933 Act”) or under any
state securities or “Blue Sky” laws (“Blue Sky Laws”).  No transfer, sale,
assignment, pledge, hypothecation or other disposition of this Warrant or the
Securities issuable upon exercise of this Warrant or any interest therein may be
made except (a) pursuant to an effective registration statement under the 1933
Act and any applicable Blue Sky Laws or (b) if the Corporation has been
furnished with an opinion of counsel for the holder, which opinion and counsel
shall be reasonably satisfactory to the Corporation, to the effect that no
registration is required because of the availability of an exemption from
registration under the 1933 Act and applicable Blue Sky laws.

 

THIS CERTIFIES THAT, for good and valuable consideration Pandora Select Partners
L.P., a British Virgin Islands limited partnership (the “Holder”), or the
Holder’s registered assigns, is entitled to subscribe for and purchase from
Zamba Corporation, a Delaware corporation (the “Corporation”), at any time on or
after May 15, 2004, to and including May 14, 2009 (subject to the limitations
provided in Section 10 below), 1,339,286 (one million three hundred thirty nine
thousand two hundred eighty six) fully paid and nonassessable shares of the
Common Stock of the Corporation at the price of $0.28 per share (the “Warrant
Exercise Price”), subject to the anti-dilution provisions of this Warrant.

 

The shares which may be acquired upon exercise of this Warrant are referred to
herein as the “Warrant Shares.”  As used herein, the term “Holder” means the
Holder, any party who acquires all or a part of this Warrant as a registered
transferee of the Holder, or any record holder or holders of the Warrant Shares
issued upon exercise, whether in whole or in part, of the Warrant.  The term
“Common Stock” means the common stock, $0.01 par value per share, of the
Corporation.

 

This Warrant is subject to the following provisions, terms and conditions:

 

1.             Exercise; Transferability.

 

(a)           The rights represented by this Warrant may be exercised by the
Holder hereof, in whole or in part (but not as to a fractional share of Common
Stock), by written notice of exercise (in the form attached hereto) delivered to
the Corporation at the principal office of the Corporation prior to the
expiration of this Warrant and accompanied or preceded by the surrender

 

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of this Warrant along with a check in payment of the Warrant Exercise Price for
such Warrant Shares.

 

(b)           Except as provided in Section 7 hereof, this Warrant may not be
sold, transferred, assigned, hypothecated or divided into two or more Warrants
of smaller denominations, nor may any Warrant Shares issued pursuant to exercise
of this Warrant be transferred.

 

2.             Exchange and Replacement.  Subject to Sections 1 and 7 hereof,
this Warrant is exchangeable upon the surrender hereof by the Holder to the
Corporation at its office for new Warrants of like tenor and date representing
in the aggregate the right to purchase the number of Warrant Shares purchasable
hereunder, each of such new Warrants to represent the right to purchase such
number of Warrant Shares (not to exceed the aggregate total number purchasable
hereunder) as shall be designated by the Holder at the time of such surrender. 
Upon receipt by the Corporation 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
Corporation will make and deliver a new Warrant of like tenor, in lieu of this
Warrant.  This Warrant shall be promptly canceled by the Corporation upon the
surrender hereof in connection with any exchange or replacement.  The
Corporation shall pay all expenses, taxes (other than stock transfer taxes), and
other charges payable in connection with the preparation, execution, and
delivery of Warrants pursuant to this Section 2.

 

3.             Issuance of the Warrant Shares.

 

(a)           The Corporation agrees that the Warrant Shares shall be and are
deemed to be issued to the Holder as of the close of business on the date on
which this Warrant shall have been surrendered and the payment made for such
Warrant Shares as aforesaid.  Subject to the provisions of paragraph (b) of this
Section 3, certificates for the Warrant Shares so purchased shall be delivered
to the Holder within a reasonable time after the rights represented by this
Warrant shall have been so exercised, and, unless this Warrant has expired, a
new Warrant representing the right to purchase the number of Warrant Shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be delivered to the Holder.

 

(b)           Notwithstanding the foregoing, however, the Corporation shall not
be required to deliver any certificate for Warrant Shares upon exercise of this
Warrant except in accordance with exemptions from the applicable securities
registration requirements or registrations under applicable securities laws. 
Except as described in Section 9, nothing herein shall obligate the Corporation
to effect registrations under federal or state securities laws.  If
registrations are not in effect and if exemptions are not available when the
Holder seeks to exercise the Warrant, the Warrant exercise period will be
extended, if need be, to prevent the Warrant from expiring, until such time as
either registrations become effective or exemptions are available, and the
Warrant

 

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shall then remain exercisable for a period of at least 30 calendar days from the
date the Corporation delivers to the Holder written notice of the availability
of such registrations or exemptions.  The Holder agrees to execute such
documents and make such representations, warranties and agreements as may be
required solely to comply with the exemptions relied upon by the Corporation, or
the registrations made, for the issuance of the Warrant Shares.

 

4.             Covenants of the Corporation.  The Corporation covenants and
agrees that all Warrant Shares will, upon issuance, be duly authorized and
issued, fully paid, non-assessable and free from all taxes, liens and charges
with respect to the issue thereof.  The Corporation further covenants and agrees
that during the period within which the rights represented by this Warrant may
be exercised, the Corporation will at all times have authorized and reserved for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.

 

5.             Anti-dilution Adjustments.  The provisions of this Warrant are
subject to adjustment as provided in this Section 5.

 

(a)           Stock Splits, Dividends and Combinations.  The Warrant Exercise
Price shall be adjusted from time to time such that in case the Corporation
shall hereafter:

 

(i)  pay any dividends on any class of stock of the Corporation payable in
Common Stock or securities convertible into Common Stock;

 

(ii)  subdivide its then outstanding shares of Common Stock into a greater
number of shares;  or

 

(iii)  combine outstanding shares of Common Stock, by reclassification or
otherwise;

 

then, in any such event, the Warrant Exercise Price in effect immediately prior
to such event shall (until adjusted again pursuant hereto) be adjusted
immediately after such event to a price (calculated to the nearest full cent)
determined by dividing (A) the number of shares of Common Stock outstanding
immediately prior to such event, multiplied by the then existing Warrant
Exercise Price, by (B) the total number of shares of Common Stock outstanding
immediately after such event (including in each case the maximum number of
shares of Common Stock issuable in respect of any securities convertible into
Common Stock), and the resulting quotient shall be the adjusted Warrant Exercise
Price per share.  An adjustment made pursuant to this Subsection shall become
effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.  If, as a result of
an adjustment made pursuant to

 

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this Subsection, the Holder of any Warrant thereafter surrendered for exercise
shall become entitled to receive shares of two or more classes of capital stock
or shares of Common Stock and other capital stock of the Corporation, the Board
of Directors (whose determination shall be conclusive) shall determine the
allocation of the adjusted Warrant Exercise Price between or among shares of
such classes of capital stock or shares of Common Stock and other capital
stock.  All calculations under this Subsection shall be made to the nearest cent
or to the nearest 1/100 of a share, as the case may be.  In the event that at
any time as a result of an adjustment made pursuant to this Subsection, the
holder of any Warrant thereafter surrendered for exercise shall become entitled
to receive any shares of the Corporation other than shares of Common Stock,
thereafter the Warrant Exercise Price of such other shares so receivable upon
exercise of any Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in this Section.

 

(b)           Mechanics of Adjustment for Stock Splits, Dividends and
Combinations.  Upon each adjustment of the Warrant Exercise Price pursuant to
Section 5(a) above, the Holder of each Warrant shall thereafter (until another
such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price
the number of shares, calculated to the nearest full share, obtained by
multiplying the number of shares specified in such Warrant (as adjusted as a
result of all adjustments in the Warrant Exercise Price in effect prior to such
adjustment) by the Warrant Exercise Price in effect prior to such adjustment and
dividing the product so obtained by the adjusted Warrant Exercise Price.

 

(c)           Consolidations, Mergers and Reorganization Events.  In case of any
consolidation or merger to which the Corporation is a party other than a merger
or consolidation in which the Corporation is the continuing corporation, or in
case of any sale or conveyance to another corporation of the property of the
Corporation as an entirety or substantially as an entirety, or in the case of
any statutory exchange of securities with another corporation (including any
exchange effected in connection with a merger of a third corporation into the
Corporation), there shall be no adjustment under Subsection (a) of this Section
5;  but the Holder of each Warrant then outstanding shall have the right
thereafter to convert such Warrant into the kind and amount of shares of stock
and other securities and property which he would have owned or have been
entitled to receive immediately after such consolidation, merger, statutory
exchange, sale or conveyance had such Warrant been converted immediately prior
to the effective date of such consolidation, merger, statutory exchange, sale or
conveyance and, in any such case, if necessary, appropriate adjustment shall be
made in the application of the provisions set forth in this Section with respect
to the rights and interests thereafter of any Holders of the Warrant, to the end
that the provisions set forth in this Section shall thereafter correspondingly
be made applicable, as nearly as may reasonably be, in relation to any shares of
stock and other securities and property thereafter deliverable on the exercise
of the Warrant.  The provisions of this Subsection shall similarly apply to
successive consolidations, mergers, statutory exchanges, sales or conveyances.

 

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(D)           ADJUSTMENTS FOR DILUTING ISSUES.  IN ADDITION TO THE ADJUSTMENTS
OF THE WARRANT EXERCISE PRICE PROVIDED ABOVE, THE WARRANT EXERCISE PRICE SHALL
BE SUBJECTED TO FURTHER ADJUSTMENT FROM TIME TO TIME AS FOLLOWS (THE MAIN
OPERATIVE PROVISION HEREOF IS IN SECTION 5(D)(III) BELOW):

 

(I)            SPECIAL DEFINITIONS:

 

(A)          “OPTIONS” SHALL MEAN RIGHTS, OPTIONS OR WARRANTS (OTHER THAN AS
EXCLUDED BY SECTION 5(D)(I)(D) BELOW) TO SUBSCRIBE FOR, PURCHASE OR OTHERWISE
ACQUIRE EITHER COMMON STOCK OR CONVERTIBLE SECURITIES (AS DEFINED HEREIN).

 

(B)           “ORIGINAL ISSUE DATE” SHALL MEAN THE DATE HEREOF.

 

(C)           “CONVERTIBLE SECURITIES” SHALL MEAN SECURITIES (OTHER THAN AS
EXCLUDED BY (4) BELOW) CONVERTIBLE, EITHER DIRECTLY OR INDIRECTLY, INTO OR
EXCHANGEABLE FOR COMMON STOCK.

 

(D)          “ADDITIONAL SHARES OF COMMON STOCK” SHALL MEAN ALL SHARES OF COMMON
STOCK ISSUED (OR, DEEMED TO BE ISSUED) BY THE CORPORATION AFTER THE ORIGINAL
ISSUE DATE, OTHER THAN SHARES OF COMMON STOCK ISSUED (OR DEEMED TO BE ISSUED):

 

1.             TO EMPLOYEES, CONSULTANTS OR DIRECTORS PURSUANT TO STOCK OPTION,
STOCK GRANT, STOCK PURCHASE OR SIMILAR PLANS OR ARRANGEMENTS APPROVED BY THE
CORPORATION’S BOARD OF DIRECTORS;

 

2.             AS A DIVIDEND OR OTHER DISTRIBUTION IN CONNECTION WITH WHICH AN
ADJUSTMENT TO THE WARRANT EXERCISE PRICE IS MADE;

 

3.             IN A MERGER, CONSOLIDATION, ACQUISITION OR SIMILAR BUSINESS
COMBINATION THAT IS APPROVED BY THE CORPORATION’S BOARD OF DIRECTORS;

 

4.             PURSUANT TO CREDIT, LEASE OR OTHER COMMERCIAL FINANCING
ARRANGEMENTS WITH PARTIES NOT AFFILIATED WITH THE CORPORATION THAT ARE APPROVED
BY THE CORPORATION’S BOARD OF DIRECTORS;

 

5.             IN EXCHANGE FOR TECHNOLOGY OR OTHER NON-CASH ASSETS AS APPROVED
BY THE CORPORATION’S BOARD OF DIRECTORS;

 

6.             PURSUANT TO ANY RIGHTS OR AGREEMENTS OUTSTANDING ON THE ORIGINAL
ISSUE DATE; OR

 

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7.             IF THE HOLDER AGREES IN WRITING THAT SUCH SHARES SHALL NOT
CONSTITUTE ADDITIONAL SHARES OF COMMON STOCK.

 

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(II)           DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. EXCEPT AS
OTHERWISE PROVIDED IN SECTION 5(D), IN THE EVENT THE CORPORATION AT ANY TIME OR
FROM TIME TO TIME AFTER THE ORIGINAL ISSUE DATE SHALL ISSUE ANY OPTIONS OR
CONVERTIBLE SECURITIES OR SHALL FIX A RECORD DATE FOR THE DETERMINATION OF ANY
HOLDERS OF ANY CLASS OF SECURITIES ENTITLED TO RECEIVE ANY SUCH OPTIONS OR
CONVERTIBLE SECURITIES, THEN THE MAXIMUM NUMBER OF SHARES (AS SET FORTH IN THE
INSTRUMENT RELATING THERETO WITHOUT REGARD TO ANY PROVISIONS CONTAINED THEREIN
FOR A SUBSEQUENT ADJUSTMENT OF SUCH NUMBER) OF COMMON STOCK ISSUABLE UPON THE
EXERCISE OF SUCH OPTIONS OR, IN THE CASE OF CONVERTIBLE SECURITIES AND OPTIONS
THEREFOR, THE CONVERSION OR EXCHANGE OF SUCH CONVERTIBLE SECURITIES, SHALL BE
DEEMED TO BE ADDITIONAL SHARES OF COMMON STOCK ISSUED AS OF THE TIME OF SUCH
ISSUE OR, IN CASE SUCH RECORD DATE SHALL HAVE BEEN FIXED, AS OF THE CLOSE OF
BUSINESS ON SUCH RECORD DATE, PROVIDED THAT IN ANY SUCH CASE IN WHICH ADDITIONAL
SHARES OF COMMON STOCK ARE DEEMED TO BE ISSUED:

 

(A)          NO FURTHER ADJUSTMENT IN THE WARRANT EXERCISE PRICE SHALL BE MADE
UPON THE SUBSEQUENT ISSUE OF SUCH CONVERTIBLE SECURITIES OR SHARES OF COMMON
STOCK UPON THE EXERCISE OF SUCH OPTIONS OR CONVERSION OR EXCHANGE OF SUCH
CONVERTIBLE SECURITIES;

 

(B)           IF SUCH OPTIONS OR CONVERTIBLE SECURITIES BY THEIR TERMS PROVIDE,
WITH THE PASSAGE OF TIME OR OTHERWISE, FOR ANY INCREASE OR DECREASE IN THE
CONSIDERATION PAYABLE TO THE COMPANY, OR INCREASE OR DECREASE IN THE NUMBER OF
SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE, CONVERSION OR EXCHANGE
THEREOF, THE WARRANT EXERCISE PRICE COMPUTED UPON THE ORIGINAL ISSUE THEREOF OR
UPON THE OCCURRENCE OF A RECORD DATE WITH RESPECT THERETO, AND ANY SUBSEQUENT
ADJUSTMENTS BASED THEREON, SHALL, UPON ANY SUCH INCREASE OR DECREASE BECOMING
EFFECTIVE, BE RECOMPUTED TO REFLECT SUCH INCREASE OR DECREASE;

 

(C)           UPON THE EXPIRATION OF ANY SUCH OPTION OR ANY RIGHTS OF CONVERSION
OR EXCHANGE UNDER SUCH CONVERTIBLE SECURITIES WHICH SHALL NOT HAVE BEEN
EXERCISED, THE WARRANT EXERCISE PRICE COMPUTED UPON THE ORIGINAL ISSUE THEREOF
OR UPON OCCURRENCE OF A RECORD DATE WITH RESPECT THERETO, AND ANY SUBSEQUENT
ADJUSTMENTS BASED THEREON, SHALL, UPON SUCH EXPIRATION:

 

1.             IN THE CASE OF CONVERTIBLE SECURITIES OR OPTIONS FOR COMMON
STOCK, BE RECOMPUTED AS THOUGH THE ONLY ADDITIONAL SHARES OF COMMON STOCK ISSUED
WERE SHARES OF COMMON STOCK, IF ANY, ACTUALLY ISSUED UPON THE EXERCISE OF SUCH
OPTIONS OR THE CONVERSION OR EXCHANGE OF SUCH CONVERTIBLE SECURITIES, AND THE
CONSIDERATION RECEIVED THEREFOR WAS THE CONSIDERATION ACTUALLY RECEIVED BY THE
COMPANY FOR THE ISSUE OF ALL SUCH OPTIONS, WHETHER OR NOT EXERCISED, PLUS THE
CONSIDERATION ACTUALLY RECEIVED BY THE COMPANY UPON SUCH EXERCISE, OR FOR THE
ISSUE OF ALL SUCH CONVERTIBLE SECURITIES, WHETHER OR NOT CONVERTED OR EXCHANGED,
PLUS THE ADDITIONAL CONSIDERATION, IF ANY, ACTUALLY RECEIVED BY THE COMPANY UPON
SUCH CONVERSION OR EXCHANGE;  AND

 

2.             IN THE CASE OF OPTIONS FOR CONVERTIBLE SECURITIES, BE RECOMPUTED
AS THOUGH ONLY THE CONVERTIBLE SECURITIES, IF ANY, ACTUALLY ISSUED UPON THE
EXERCISE

 

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THEREOF WERE ISSUED AT THE TIME OF ISSUE OF SUCH OPTIONS AND THE CONSIDERATION
RECEIVED BY THE COMPANY FOR THE ADDITIONAL SHARES OF COMMON STOCK DEEMED TO HAVE
BEEN THEN ISSUED WAS THE CONSIDERATION ACTUALLY RECEIVED BY THE COMPANY FOR THE
ISSUE OF ALL SUCH OPTIONS, WHETHER OR NOT EXERCISED, PLUS THE CONSIDERATION
DEEMED TO HAVE BEEN RECEIVED BY THE COMPANY UPON THE ISSUE OF THE CONVERTIBLE
SECURITIES WITH RESPECT TO WHICH SUCH OPTIONS WERE ACTUALLY EXERCISED.

 

(D)          NO READJUSTMENT PURSUANT TO SECTION 5(D) SHALL HAVE THE EFFECT OF
INCREASING THE WARRANT EXERCISE PRICE TO AN AMOUNT WHICH EXCEEDS THE WARRANT
EXERCISE PRICE EXISTING IMMEDIATELY PRIOR TO THE ORIGINAL ADJUSTMENT WITH
RESPECT TO THE ISSUANCE OF SUCH OPTIONS OR CONVERTIBLE SECURITIES, AS ADJUSTED
FOR ANY ADDITIONAL SHARES OF COMMON STOCK ISSUED (OR DEEMED TO BE ISSUED)
BETWEEN SUCH ORIGINAL ADJUSTMENT DATE AND SUCH READJUSTMENT DATE;  AND

 

(E)           IN THE CASE OF ANY OPTION OR CONVERTIBLE SECURITY WITH RESPECT TO
WHICH THE MAXIMUM NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OR
CONVERSION OR EXCHANGE THEREOF IS NOT DETERMINABLE, NO ADJUSTMENT TO THE WARRANT
EXERCISE PRICE SHALL BE MADE UNTIL SUCH NUMBER BECOMES DETERMINABLE.

 

(III)          ADJUSTMENTS FOR ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. 
IF THE COMPANY, AT ANY TIME AFTER THE ISSUANCE OF THIS WARRANT, SHALL ISSUE ANY
ADDITIONAL SHARES OF COMMON STOCK (OTHERWISE THAN AS PROVIDED IN THE SECTIONS
5(A) AND 5(C) ABOVE) AT A PRICE PER SHARE LESS THAN THE APPLICABLE WARRANT
EXERCISE PRICE THEN IN EFFECT OR WITHOUT CONSIDERATION, THEN THE APPLICABLE
WARRANT EXERCISE PRICE UPON EACH SUCH ISSUANCE SHALL BE ADJUSTED TO THAT PRICE
(ROUNDED TO THE NEAREST CENT) DETERMINED BY MULTIPLYING THE APPLICABLE WARRANT
EXERCISE PRICE THEN IN EFFECT BY A FRACTION, (I) THE NUMERATOR OF WHICH SHALL BE
EQUAL TO THE SUM OF (A) THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING
IMMEDIATELY PRIOR TO THE ISSUANCE OF SUCH ADDITIONAL SHARES OF COMMON STOCK PLUS
(B) THE NUMBER OF SHARES OF COMMON STOCK (ROUNDED TO THE NEAREST WHOLE SHARE)
WHICH THE AGGREGATE CONSIDERATION FOR THE TOTAL NUMBER OF SUCH ADDITIONAL SHARES
OF COMMON STOCK SO ISSUED WOULD PURCHASE AT A PRICE PER SHARE EQUAL TO THE
APPLICABLE WARRANT EXERCISE PRICE THEN IN EFFECT, AND (II) THE DENOMINATOR OF
WHICH SHALL BE EQUAL TO THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING
IMMEDIATELY AFTER THE ISSUANCE OF SUCH ADDITIONAL SHARES OF COMMON STOCK.

 

THE PROVISIONS OF THIS SECTION 5(D)(III) SHALL NOT APPLY UNDER ANY OF THE
CIRCUMSTANCES FOR WHICH AN ADJUSTMENT IS PROVIDED IN SECTIONS 5(A), 5(B) OR 5(C)
ABOVE.  NO ADJUSTMENT OF THE APPLICABLE WARRANT EXERCISE PRICE SHALL BE MADE
UNDER THIS SECTION 5(D) UPON THE ISSUANCE OF ANY ADDITIONAL SHARES OF COMMON
STOCK WHICH ARE ISSUED PURSUANT TO ANY OPTIONS OR CONVERTIBLE SECURITIES IF UPON
THE ISSUANCE OF SUCH OPTIONS OR CONVERTIBLE SECURITIES (X) ANY ADJUSTMENT SHALL
HAVE BEEN MADE PURSUANT TO SECTION 5(D)(II) ABOVE OR (Y) NO ADJUSTMENT WAS
REQUIRED PURSUANT TO THIS SECTION 5(D)(III).  NO ADJUSTMENT OF THE APPLICABLE
WARRANT EXERCISE PRICE SHALL BE MADE UNDER THIS SECTION 5(D)(III) IN AN AMOUNT
LESS THAN $.01 PER SHARE, BUT ANY SUCH LESSER ADJUSTMENT SHALL BE CARRIED
FORWARD AND SHALL BE MADE AT THE TIME AND TOGETHER WITH

 

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THE NEXT SUBSEQUENT ADJUSTMENT, IF ANY, WHICH TOGETHER WITH ANY ADJUSTMENTS SO
CARRIED FORWARD SHALL AMOUNT TO $.01 PER SHARE OR MORE;  PROVIDED, HOWEVER, THAT
UPON ANY ADJUSTMENT OF THE APPLICABLE WARRANT EXERCISE PRICE AS A RESULT OF ANY
DIVIDEND OR DISTRIBUTION PAYABLE IN COMMON STOCK OR CONVERTIBLE SECURITIES OR
THE RECLASSIFICATION, SUBDIVISION OR COMBINATION OF COMMON STOCK INTO A GREATER
OR SMALLER NUMBER OF SHARES, THE FOREGOING FIGURE OF $.01 PER SHARE (OR SUCH
FIGURE AS LAST ADJUSTED) SHALL BE ADJUSTED (TO THE NEAREST ONE-HALF CENT) IN
PROPORTION TO THE ADJUSTMENT IN THE APPLICABLE WARRANT EXERCISE PRICE.

 

(IV)          DETERMINATION OF CONSIDERATION. FOR PURPOSES OF THIS SECTION 5(D),
THE CONSIDERATION RECEIVED BY THE CORPORATION FOR ANY ADDITIONAL SHARES OF
COMMON STOCK ISSUED (OR DEEMED TO BE ISSUED) SHALL BE COMPUTED AS FOLLOWS:

 

(A)          CASH AND PROPERTY.  SUCH CONSIDERATION SHALL:

 

(i)            insofar as it consists of cash, be computed at the aggregate
amount of cash received by the Company;

 

(ii)           insofar as it consists of securities and the value of such
securities is not determinable by reference to a separate agreement, (A) if the
securities are then traded on a national securities exchange or the Nasdaq Stock
Market (or a similar national quotation system), then the value shall be
computed based on the average of the closing prices of the securities on such
exchange or system over the thirty (30)-day period ending on the date of receipt
by the Corporation, (B) if the securities are actively traded over-the-counter,
then the value shall be computed based on the average of the closing bid prices
over the thirty (30) day ending on the date of receipt by the Corporation, and
(C) if there is no active public market, then the value shall be computed based
on the fair market value thereof on the date of receipt by the Corporation, as
determined in good faith by the Board of Directors;

 

(iii)          insofar as it consists of property other than cash and
securities, be computed at the fair market value thereof at the time of such
issuance, as determined in good faith by the Board of Directors; and

 

(iv)          if Additional Shares of Common Stock are issued (or deemed to be
issued) together with other shares or securities or other assets of the
Corporation for consideration which cover both, by the proportion of such
consideration so received, computed as provided in the immediately preceding
Sections 5(d)(iv)(A)(i), 5(d)(iv)(A)(ii) and 5(d)(iv)(A)(iii), as determined in
good faith by the Board of Directors.

 

(B)           OPTIONS AND CONVERTIBLE SECURITIES.  THE CONSIDERATION RECEIVED BY
THE CORPORATION FOR ADDITIONAL SHARES OF COMMON STOCK DEEMED TO HAVE BEEN ISSUED
PURSUANT TO SECTION 5(D) RELATING TO OPTION AND CONVERTIBLE SECURITIES, SHALL BE
THE SUM OF (X) THE TOTAL

 

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amount, if any, received or receivable by the Corporation as consideration for
the issue of such Options or Convertible Securities, plus (y) the minimum
aggregate amount of additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the Corporation upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion or exchange of
such Convertible Securities.

 

(e)           Certificate as to Adjustments.  Upon the occurrence of each
adjustment or readjustment of the Warrant Exercise Price or the number of
Warrants covered hereby pursuant to this Section 5, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Holder a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based.  The Corporation shall, upon the written
request at any time of the Holder, furnish or cause to be furnished to the
Holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Warrant Exercise Price at the time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the exercise of this Warrant.

 

6.             No Voting Rights.  This Warrant shall not entitle the Holder to
any voting rights or other rights as a shareholder of the Corporation.

 

7.             Notice of Transfer of Warrant or Resale of the Warrant Shares.

 

(a)           Subject to the sale, assignment, hypothecation or other transfer
restrictions set forth in Section 1 hereof, the Holder, by acceptance hereof,
agrees to give written notice to the Corporation before transferring this
Warrant or transferring any Warrant Shares of such Holder’s intention to do so,
describing briefly the manner of any proposed transfer, the identity of the
proposed transferee, whether such transferee is an accredited investor and
whether such transferee is sufficiently knowledgeable to assess the risks and
merits of an investment in the Warrant or the Common Stock.  Promptly upon
receiving such written notice, the Corporation shall present copies thereof to
the Corporation’s counsel.  If in the opinion of such counsel the proposed
transfer may be effected without registration or qualification (under any
federal or state securities laws), the Corporation, as promptly as practicable,
shall notify the Holder of such opinion, whereupon the Holder shall be entitled
to transfer this Warrant or to dispose of Warrant Shares received upon the
previous exercise of this Warrant, all in accordance with the terms of the
notice delivered by the Holder to the Corporation; provided that an appropriate
legend may be endorsed on this Warrant or the certificates for such Warrant
Shares respecting restrictions upon transfer thereof necessary or advisable in
the opinion of counsel and satisfactory to the Corporation to prevent further
transfers which would be in violation of Section 5 of the 1933 Act and
applicable state securities laws;  and provided further that the prospective
transferee or

 

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purchaser shall execute such documents and make such representations, warranties
and agreements as may be required solely to ensure compliance with the
exemptions from registration under the 1933 Act relied upon by the Corporation
for the transfer or disposition of the Warrant or Warrant Shares, and compliance
with the anti-fraud provisions of the Securities Exchange Act of 1934.

 

(b)           If, in the opinion of the Corporation’s counsel, the proposed
transfer or disposition of this Warrant or such Warrant Shares described in the
written notice given pursuant to this Section 7 may not be effected without
registration or qualification of this Warrant or such Warrant Shares, the
Corporation shall promptly give written notice thereof to the Holder, and the
Holder will limit its activities in respect to such transfer or disposition as,
in the opinion of such counsel, are permitted by law.

 

8.             Fractional Shares.  Fractional shares shall not be issued upon
the exercise of this Warrant, but in any case where the holder would, except for
the provisions of this Section, be entitled under the terms hereof to receive a
fractional share, the Corporation shall, upon the exercise of this Warrant for
the largest number of whole shares then called for, pay a sum in cash equal to
the sum of (a) the excess, if any, of the Market Price of such fractional share
over the proportional part of the Warrant Exercise Price represented by such
fractional share, plus (b) the proportional part of the Warrant Exercise Price
represented by such fractional share.  For purposes of this Section, the term
“Market Price” with respect to shares of Common Stock of any class or series
means the last reported sale price or, if none, the average of the last reported
closing bid and asked prices on any national or regional securities exchange or
quoted in the National Association of Securities Dealers, Inc.’s Automated
Quotations System (“Nasdaq”), or if not listed on a national or regional
securities exchange or quoted in Nasdaq, the average of the last reported
closing bid and asked prices as reported by Metro Data Corporation, Inc. or the
OTC Bulletin Board from quotations by market makers in such Common Stock on the
Minneapolis-St. Paul local over-the-counter market, or if no quotations in such
Common Stock are available, the fair market value of the shares as determined in
good faith by the Board of Directors of the Corporation.

 

9.             Registration Rights.  Holder shall have registration rights for
the shares underlying its Warrants as described in the Registration Rights
Agreement of this same date.

 

10.          Limitation of Exercise of this Warrant.  Despite anything to the
contrary in this Warrant, the Holder may not exercise this Warrant during the
time period and to the extent that the shares of Common Stock that the Holder
could acquire upon the exercise hereof would cause Holder’s Beneficial Ownership
(as defined below) of the Corporation’s Common Stock to exceed 4.99%.  These
limitations on the right to exercise this Warrant shall first reduce the
Holder’s Beneficial Ownership of the Corporation’s Common Stock before
limitation of the Corporation’s right to make payments in Common Stock under the
Note.  The parties shall compute the

 

11

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Holder’s “Beneficial Ownership” of Common Stock in accordance with U.S.
Securities and Exchange Commission Rule 13d-3.  The Holder will, at the request
of the Corporation, from time to time, notify the Corporation of the Holder’s
computation of Holder’s Beneficial Ownership.

 

IN WITNESS WHEREOF, Zamba Corporation has caused this Warrant to be signed by
its duly authorized officer and this Warrant to be dated May 14, 2004.

 

 

ZAMBA CORPORATION

 

 

 

 

 

 

By

/s/ Michael H. Carrel

 

 

 

Michael H. Carrel, Treasurer

 

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EXERCISE FORM

 

(To Be Executed by the Registered Holder in Order to Exercise the Warrant)

 

To:          Zamba Corporation

 

The undersigned hereby irrevocably elects to exercise the attached Warrant to
purchase for cash,                    of the shares issuable upon the exercise
of such Warrant, and requests that certificates for such shares (together with a
new Warrant to purchase the number of shares, if any, with respect to which this
Warrant is not exercised) shall be issued in the name of:

 

 

 

NAME:

 

 

 

 

 

SOC. SEC. or

 

 

TAX I.D. NO.

 

 

 

 

 

ADDRESS:

 

 

 

 

 

 

 

Date:                  , 20      .

 

 

 

 

Signature *

 

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*                                         The signature on the Notice of
Exercise of Warrant must correspond to the name as written upon the face of the
Warrant in every particular without alteration or enlargement or any change
whatsoever.  When signing on behalf of a corporation, partnership, trust or
other entity, please indicate your position(s) and title(s) with such entity.

 

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ASSIGNMENT FORM

 

(To be Executed by the Registered Holder in Order to Transfer the Warrant)

 

To:          Zamba Corporation

 

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto
                                  the right to purchase the securities of Zamba
Corporation to which the within Warrant relates and appoints
                       , attorney, to transfer said right on the books of Zamba
Corporation with full power of substitution in the premises.

 

Dated:                   20    

 

 

(Signature)

 

 

 

Address:

 

 

 

 

 

 

 

 

 

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