Document:

ngru_8k-ex1071.htm

    
      EXHIBIT 10.71

       

      WAIVER AND AMENDMENT
AGREEMENT

       

      This
Waiver and Amendment Agreement, dated as of August 29, 2008
(the “Agreement”), is by and among
BPO Management Services, Inc. (the “Company”), and the undersigned
Purchasers (defined below), on behalf of all Purchasers (the “Purchaser
Representatives”).  All capitalized terms used but not defined
herein shall have the meaning set forth in that certain Registration Rights
Agreement, dated as of June 13, 2007 (the “Registration Rights
Agreement”), by and among the Company and those persons listed on
Schedule I thereto (the “Purchasers”).  The
Company and the Purchasers are, together, the “Parties.”

       

      RECITALS

       

      WHEREAS,
the Parties entered into the Registration Rights Agreement to provide the
Purchasers with certain registration rights for certain of the securities in the
Company owned by them;

       

      WHEREAS,
the Company filed a Registration Statement on Form SB-2 with the Securities and
Exchange Commission, pursuant to the Registration Rights Agreement, but such
Registration Statement has not been declared effective;

       

      WHEREAS,
the Purchasers no longer require the Registration Statement to become effective
due to the provisions of Rule 144 and certain other legal and business
agreements; and

       

      WHEREAS,
the Purchaser Representatives, being at least 75% of the Holders of Registrable
Securities, desire to waive any liquidated damages owed to the Purchasers by the
Company that relate to the Registration Rights Agreement and to amend and
restate the Registration Rights Agreement to rid the Company of the requirement
to register for re-sale any securities of the Purchasers.

       

      NOW,
THEREFORE, in consideration of the premises 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:

       

      ARTICLE
1

      WAIVER

       

      1.           Waiver of
Damages.  The undersigned Purchasers, on behalf of all
Purchasers, pursuant to Section 7(f) of the Registration Rights Agreement,
hereby waive and disclaim any right to any and all damages from and after June
13, 2007, through and including the date hereof, owed or potentially owed by the
Company to any of the Purchasers resulting form any provisions of the
Registration Rights Agreement, including without limitation any liquidated
damages owed or potentially owed by the Company to any of the Purchasers
pursuant to Section 7(e) of the Registration Rights Agreement.

       

      
        
           

        

        
          -1-

          
            

          

        

        
           

        

      

      ARTICLE
2

      AMENDMENT

       

      2.           Amendment of Registration
Rights Agreement.  The Registration Rights Agreement is hereby
amended and restated as reflected in Exhibit A of this Agreement.

       

      ARTICLE
3

      MISCELLANEOUS
PROVISIONS

       

      3.           Miscellaneous
Provisions.

       

      3.1           No Further
Amendments.  This Agreement may only be modified or amended by
a written agreement in the manner provided by the Registration Rights
Agreement.

       

      3.2           Counterparts.  This
Agreement 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.

       

      3.3           Binding on
Successors. This Agreement shall be
binding upon and shall inure to the benefit of the successors and permitted
assigns of the Parties.

       

      3.4           Entire Agreement.
 This Agreement
contains the entire understanding among the Parties and supersede any prior
written or oral agreements among them respecting the subject matter contained
herein.  There are no representations, agreements, arrangements or
understandings, oral or written, among the Parties relating to the subject
matter hereof that are not fully expressed herein and therein.

       

      [SIGNATURE
PAGES TO FOLLOW]

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the Company and the Purchaser Representatives have executed or
have caused a duly authorized officer to execute this Agreement, all effective
as of the day and year first above written.

       

      THE
COMPANY:

      
         

        BPO
MANAGEMENT SERVICES, INC.,

        a
Delaware corporation

        

        
          	
                  By:

                	/s/ Patrick A.
      Dolan	 
      
	
                  Name:

                	
                  Patrick
      A. Dolan

                	 
      
	
                  Its:

                	
                  Chief
      Executive Officer

                	 
      

        

        

        

        
          THE
PURCHASER REPRESENTATIVES:

        

         

        VISION
OPPORTUNITY MASTER FUND, LTD.

        

         

        
          	
                  By:

                	/s/ Adam
      Benowitz	 
      
	
                  Name:

                	Adam
    Benowitz	 
      
	
                  Its:

                	Director	 
      

        

        

        

        RENAISSANCE
CAPITAL GROWTH & INCOME FUND III, INC.

        

        

        
          	
                  By:

                	/s/ Russell
      Cleveland	 
      
	 
      	
                  Russell
      Cleveland

                	 
      
	 
      	
                  President

                	 
      

        

        
 

        RENAISSANCE
US GROWTH INVESTMENT TRUST PLC

        

        

        
          	
                  By:

                	/s/ Russell
      Cleveland	 
      
	 
      	
                  Russell
      Cleveland

                	 
      
	 
      	
                  President

                	 
      

        

        

        

        US
SPECIAL OPPORTUNITIES TRUST PLC

        

        

        
          	
                  By:

                	/s/ Russell
      Cleveland	 
      
	 
      	
                  Russell
      Cleveland

                	 
      
	 
      	
                  President

                	 
      

        

        
          
            
                                                                       

            

             

          

          
            -3-

            
              

            

          

          
             

          

        

         

        PREMIER
RENN US EMERGING GROWTH FUND LTD.

        

        

        
          	
                  By:

                	/s/ Russell
      Cleveland	 
      
	 
      	
                  Russell
      Cleveland

                	 
      
	 
      	
                  President

                	 
      

        

        

        

        BRIDGEPOINTE
MASTER FUND LTD.

        

        

        
          	
                  By:

                	 	 
      
	 
      	
                  Name:

                	 
      
	 
      	
                  Title:

                	 
      

        

        
 

        HELLER
CAPITAL INVESTMENTS LLC

        

        

        
          	
                  By:

                	/s/ Ronald J. Heller	 
      
	 
      	
                  Name:
      Ronald J. Heller

                	 
      
	 
      	
                  Title:
      Chief Executive Officer

                	 
      

        

        

             

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    Amended
and Restated Registration Rights Agreement

     

    (attached)

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    AMENDED
AND RESTATED

    REGISTRATION
RIGHTS AGREEMENT

    

    This
Amended and Restated Registration Rights Agreement (this “Agreement”) dated
August 29, 2008, amends and restates that certain Registration Rights Agreement,
made and entered into as of June 13, 2007 (the “Registration Rights
Agreement”), by and among BPO Management Services, Inc., a Delaware
corporation (the “Company”), and those
persons stated on Schedule I hereto (the “Purchasers”).  This
Agreement is being entered into pursuant to Section 7(f) of the Registration
Rights Agreement.

    

    The
Company and the Purchasers hereby agree as follows:

    

    1.            
Definitions.

    

    Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in that certain Series D Convertible Preferred Stock Purchase Agreement,
dated as of June 13, 2007, by and among the Company and the Purchasers (“the
“Purchase
Agreement”).  As used in this Amendment, the following terms
shall have the following meanings:

    

    “Affiliate” means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such
Person.  For the purposes of this definition, “control,” when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of “affiliated,” “controlling” and
“controlled”
have meanings correlative to the foregoing.

    

    “Business Day” mans
any day except Saturday, Sunday and any date which shall be a legal holiday or a
day on which banking institutions in the State of New York generally are
authorized or required by law or other government actions to close.

    

    “Common Stock” means
the Company’s Common Stock, par value $0.01 per share.

    

    “Holder” or “Holders” means the
holder or holders, as the case may be, from time to time of Registrable
Securities.

    

    “Indemnified Party”
shall have the meaning set forth in Section 5(c).

    

    “Indemnifying Party”
shall have the meaning set forth in Section 5(c).

    

    “Losses” shall have
the meaning set forth in Section 5(a).

    

    “NASD” means the
National Association of Securities Dealers, Inc.

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    

    “Person” means an
individual or a corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.

    

    “Preferred Stock”
means shares of the Company’s Series D Convertible Preferred Stock issued to the
Purchasers pursuant to the Purchase Agreement and shares of the Company’s Series
D-2 Convertible Preferred Stock issued to the Purchasers upon exercise of the
Series J Warrants.

    

    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.

    

    “Registrable
Securities” means the shares of Common Stock issuable upon conversion of
the Preferred Stock and any dividends accrued or payable thereon plus the shares
of Common Stock issuable upon exercise of the Warrants.

    

    “Rule 144” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

    

    “Securities Act” means
the Securities Act of 1933, as amended.

    

    “Warrants” means the
warrants to purchase shares of Common Stock and the warrants to purchase shares
of the Company’s Series D-2 Convertible Preferred Stock, all issued to the
Purchasers pursuant to the Purchase Agreement.

    

    2.           Registration
Requirements.  The Company shall not be required to register
any of the securities of any of the Purchasers in any manner and at any
time.

    

    3.           Withdrawal of Registration
Statement.  The Company is entitled to, at its sole discretion,
withdraw any registration statement currently pending with the Securities and
Exchange Commission without the Purchasers’ consent, including without
limitation that certain Registration No. 333-144570.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    4.           Registration
Expenses.

    

    All fees
and expenses incident to the performance of or compliance with this Agreement by
the Company, except as and to the extent specified in this Section 4, shall be
borne by the Company.  The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with the OTC Bulletin Board and/or each other
securities exchange or market on which Registrable Securities are required
hereunder to be quoted or listed, if any, (B) with respect to filing fees
required to be paid to NASD, the NASD Regulation, Inc. and the OTC Compliance
Unit, if any, each as applicable, and (C) in compliance with state securities or
Blue Sky laws (including, without limitation, fees and disbursements of counsel
for the Holders in connection with Blue Sky qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as the Holders of a majority
of Registrable Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable
Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the Company’s independent public accountants (including the expenses
of any comfort letters or costs associated with the delivery by independent
public accountants of a comfort letter or comfort letters).  In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder.  The Company shall not be responsible for any discounts,
commissions, transfer taxes or other similar fees incurred by the Holders in
connection with the sales of the Registrable Securities.

    

    5.           Indemnification.

    

    (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, managers, partners, members, shareholders, agents, brokers,
investment advisors and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and reasonable attorneys’
fees) and expenses (collectively, “Losses”) , as
incurred, arising out of or relating to any violation of securities laws by the
Company.  The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding of which the Company is aware
in connection with the transactions contemplated by this Agreement.

     

    
      (b)           [Reserved].

    

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    (c)           Conduct of Indemnification
Proceedings.  If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party promptly shall notify the Person from whom indemnity is
sought (the “Indemnifying Party)
in writing, and the Indemnifying Party shall be entitled to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof (including reasonable attorneys’ fees and
expenses); provided, that the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have proximately and materially adversely prejudiced the Indemnifying
Party.

    

    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such parties shall have been advised by counsel
that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party).  The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed.  No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened Proceeding in respect of which any Indemnified Party is a party
and indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.

    

    All fees
and expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten (10) Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the
Indemnified Party shall reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    (d)           Contribution.  If
a claim for indemnification under Section 5(a) is due but unavailable to an
Indemnified Party because of a failure or refusal of a governmental authority to
enforce such indemnification in accordance with its terms (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying,
Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission.  The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 5(c), any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.  In no event shall any
selling Holder be required to contribute an amount under this Section 5(d) in
excess of the net proceeds received by such Holder upon sale of such Holder’s
Registrable Securities.

    

    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.  No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

    

    The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties pursuant to the law.

    

    6.           Rule
144.

    

    As long
as any Holder owns Preferred Stock, Warrants or Registrable Securities, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act.  As long as any Holder owns Preferred Stock, Warrants or
Registrable Securities, if the Company is not required to file reports pursuant
to Section 13(a) or 15(d) of the Exchange Act, it will prepare and furnish to
the Holders and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act annual and quarterly financial statements,
together with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act, as
well as any other information required thereby, in the time period that such
filings would have been required to have been made under the Exchange
Act.  The Company further covenants that it will take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable such Person to sell Conversion Shares and Warrant Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act, including
providing any legal opinions relating to such sale pursuant to Rule
144.  Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    7.           Miscellaneous.

    

    (a)           Remedies.  In
the event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, such Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.  The
Company and each Holder agree that monetary damages would not provide adequate compensation
for any losses incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

    

    (b)           No Inconsistent
Agreements.  Neither the Company nor any of its subsidiaries
has, as of the date hereof entered into and currently in effect, nor shall the
Company or any of its subsidiaries, on or after the date of this Agreement,
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof.  Except as disclosed in Schedule 2.1(c) of
the Purchase Agreement, neither the Company nor any of its subsidiaries has
previously entered into any agreement currently in effect granting any
registration rights with respect to any of its securities to any
Person.  Without limiting the generality of the foregoing, without the
written consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.

    

    (c)           [Reserved].

    

    (d)           [Reserved].

    

    (e)           [Reserved].

    

    (f)           Amendments and
Waivers.  The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Holders of
seventy-five percent (75%) of the Registrable Securities
outstanding.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    (g)           Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, or delivery by telex, e-mail or facsimile at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first
occur.  The addresses for such communications shall be:

     

    
      	 	
              If
      to the Company:

            	
              BPO
      Management Services, Inc.

              1290
      N. Hancock, Ste 202

              Anaheim,
      CA 92807

              Attention:
      Chief Executive Officer

              Tel.
      No.: (714) 974-2670

              Fax
      No.:  (714) 974-4771

              E-mail:  patrick.dolan@bpoms.com

            
	 	 
      	 
      
	 	
              with
      copies (which shall not constitute notice) to:

            	
              Bryan
      Cave LLP

              1900
      Main Street, Suite 700

              Irvine,
      CA  92614

              Attention:
      Randolf W. Katz, Esq.

              Tel.
      No.: (949) 223-7103

              Fax
      No.:  (949) 223-7100

              E-mail:
      rwkatz@bryancave.com

            
	 	
              and:

            	 
      
	 	 
      	
              Cornman
      & Swartz

              19800
      MacArthur Blvd., Suite 820

              Irvine,
      CA 92612

              Attention:
      Jack T. Cornman, Esq.

              Tel.
      No.:  (949) 224-1500

              Fax
      No.:  (949) 224-1505

            
	 	
               

              If
      to any Purchaser:

            	
               

              At
      the address of such Purchaser set forth on Schedule I
      to this Agreement, with copies to Purchaser’s counsel as set forth
      below or as specified in writing by such Purchaser:

            
	 	 
      	 
      

    

     

    Any party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.

    

    (h)           Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns and shall
inure to the benefit of each Holder and its successors and
assigns.  The Company may not assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of each
Holder.  Each Purchaser may assign its rights hereunder in the manner
and to the Persons as permitted under the Purchase Agreement.

    

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    (i)           [Reserved].

    

    (j)           [Reserved].

    

    (k)          Governing Law;
Jurisdiction.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to any of the conflicts of law principles which would result in
the application of the substantive law of another jurisdiction.  This
Agreement shall not be interpreted or construed with any presumption against the
party causing this Agreement to be drafted.  The Company and the
Holders agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue.  The Company and
the Holders irrevocably consent to personal jurisdiction in the state and
federal courts of the state of New York.  The Company and the Holders
consent to process being served in any such suit, action or proceeding by
delivering a copy thereof to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing in this
Section 7(k) shall affect or limit any right to serve process in any other
manner permitted by law.  The Company and the Holders hereby agree
that the prevailing party in any suit, action or proceeding arising out of or
relating to this Agreement or the Purchase Agreement, shall be entitled to
reimbursement for reasonable legal fees from the non-prevailing
party.  The parties hereby waive all rights to a trial by
jury.

     

    (l)           Cumulative
Remedies.  The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

    

    (m)         Severability. If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.  It is
hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

    

    (n)          Headings.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

    

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    (o)          Shares Held by the Company
and its Affiliates. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its Affiliates (other than any
Holder or transferees or successors or assigns thereof if such Holder is deemed
to be an Affiliate solely by reason of its holdings of such Registrable
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.

    

    (p)          Independent Nature of
Purchasers.  The Company acknowledges that the obligations of
each Purchaser under the Transaction Documents are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under the
Transaction Documents.  The Company acknowledges that the decision of
each Purchaser to purchase Securities pursuant to the Purchase Agreement has
been made by such Purchaser independently of any other Purchaser and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or of
its Subsidiaries which may have been made or given by any other Purchaser or by
any agent or employee of any other Purchaser, and no Purchaser or any of its
agents or employees shall have any liability to any Purchaser (or any other
person) relating to or arising from any such information, materials, statements
or opinions.  The Company acknowledges that nothing contained herein,
or in any Transaction Document, and no action taken by any Purchaser pursuant
hereto or thereto shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  The Company acknowledges that each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such
purpose.  The Company acknowledges that for reasons of administrative
convenience only, the Transaction Documents have been prepared by counsel for
one of the Purchasers and such counsel does not represent all of the
Purchasers.  The Company acknowledges that it has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by the
Purchasers.  The Company acknowledges that such procedure with respect
to the Transaction Documents in no way creates a presumption that the Purchasers
are in any way acting in concert or as a group with respect to the Transaction
Documents or the transactions contemplated hereby or thereby.

    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    Schedule
I

    

    Purchasers

    

    
      	
              Legal
      Entity Name and Address

              of
      Purchaser

               

            
	
              VISION
      OPPORTUNITY MASTER FUND, LTD.

            
	
              20
      W. 55th Street, 5th
      floor

            
	
              New
      York, NY 10019

            
	
              Tel:
      Fax: 212-867-1416

            
	
              Attn:  Adam
      Benowitz and Antti Uusiheimala

            
	
              E-mail:
      adam@visicap.com & antti@visicap.com

            
	 
      
	
              RENAISSANCE
      US GROWTH INVESTMENT TRUST PLC (“RUSGIT”)

            
	
              Frost
      National Bank

            
	
              100
      W. Houston Street

            
	
              ATTN:
      Henri Domingues T-8

            
	
              San
      Antonio, TX 78205

            
	
              Contact
      for docs: Eric Stephens

            
	
              Tel:
      (214) 891-8046/ Fax:

            
	
              Email:
      estephens@rencapital.com

            
	 
      
	
              RENAISSANCE
      CAPITAL GROWTH & INCOME FUND III,
  INC. (“RENN3”)

            
	
              Frost
      National Bank

            
	
              100
      W. Houston Street

            
	
              ATTN:
      Henri Domingues T-8

            
	
              San
      Antonio, TX 78205

            
	
              Contact
      for docs: Eric Stephens

            
	
              Tel:
      (214) 891-8046/ Fax:

            
	
              Email:
      estephens@rencapital.com

            
	 
      
	
              US
      SPECIAL OPPORTUNITIES TRUST PLC (“USSO”)

            
	
              Frost
      National Bank

            
	
              100
      W. Houston Street

            
	
              ATTN:
      Henri Domingues T-8

            
	
              San
      Antonio, TX 78205

            
	
              Contact
      for docs: Eric Stephens

            
	
              Tel:
      (214) 891-8046/ Fax:

            
	
              Email:
      estephens@rencapital.com

            
	 
      

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    
      	
              PREMIER RENN US EMERGING GROWTH
      FUND LTD. (“PREMIER”)

            
	 
	
              Premier
      RENN US Emerging Growth Fund Ltd.

            
	
              Acct
      # PRN01/17-28085

            
	
              c/o
      Cristina Ramones

            
	
              The
      Northern Trust Company

            
	
              801
      South Canal Street, C-1-North

            
	
              Chicago,
      IL 60607

            
	
              Contact
      for docs: Eric Stephens

            
	
              Tel:
      (214) 891-8046/ Fax:

            
	
              Email:
      estephens@rencapital.com

            
	 
      
	
              BRIDGEPOINTE
      MASTER FUND LTD.

            
	
              1120
      Sanctuary Parkway, Suite 325

            
	
              Alpharetta,
      GA 30004

            
	
              Contact
      for docs: Brad Hathorn

            
	
              Tel:
      770-640-8130 ext 120 Fax: 770.777.5844

            
	
              Email:
      bradhathorn@roswellcapitalpartners.com

            
	 
      
	
              HELLER
      CAPITAL INVESTMENTS LLC

            
	
              700
      E. Palisade Ave

            
	
              Englewood
      Cliffs, NJ 07632

            
	
              Contacts
      for docs: Steven Hart

            
	
              Tel:
      201-816-4235/ Fax:  201-569-5014

            
	
              Email:
      shart@hellercapitalpartners.com

            

    

    

    
2ngru_8k-ex1072.htm

EXHIBIT 10.72

     

    AMENDED
AND RESTATED WARRANT ACKNOWLEDGEMENT

     

    This
Amended and Restated Warrant Acknowledgement is made effective as of August 29, 2008 by
and between BPO Management Servcies, Inc., a Delaware corporation (together with
its successors and assigns, the “Issuer”), and certain Investors (as defined
below), whose names are indicated on the signature page
hereto.

     

    RECITALS

     

    WHEREAS,
the Issuer and certain investors (each an “Investor” and collectively, the
“Investors”) previously entered into a Series A Warrant to Purchase Shares of
Common Stock of BPO Management Services, Inc. issued June 13, 2007, Series B
Warrant to Purchase Shares of Common Stock of BPO Management Services, Inc.
issued June 13, 2007, Series C Warrant to Purchase Shares of Common Stock of BPO
Management Services, Inc. issued June 13, 2007, and Series D Warrant to Purchase
Shares of Common Stock of BPO Management Services, Inc. issued June 13, 2007
(the “Original Warrants”);

     

    WHEREAS,
certain terms of certain of the Original Warrants were amended in respect of the
Company and certain of the Investors;

     

    WHEREAS,
each of the Original Warrants provides for certain anti-dilution protection in
the event that the Issuer issues any shares of its Common Stock (as defined
therein) or any warrants to purchase its Common Stock for a per-share price less
than the then-current “Warrant Price” for such Warrant (the “Price
Protections”);

     

     

    WHEREAS,
the Issuer desires to make certain additional amendments to certain of the
Original Warrants by amending and restating the same (the “Amended and Restated
Warrants”);

     

    WHEREAS,
Section 11 of the Original Warrants provides that any provision of the Original
Warrants may be amended or waived with the prior written approval of the Issuer
and the holders of a majority of the warrant shares issuable upon the exercise
of the Original Warrants; and

     

    WHEREAS,
the Issuer and each of the Investors who execute this Aemended and Restated
Warrant Acknowledgement, by their respective signature below, desire to
memorialize their approval of the Amended and Restated Warrants, and all
amendments made therein.

     

    ARTICLE
1

    AGREEMENT

    

    NOW,
THEREFORE, in consideration of the covenants and conditions herein contained,
the Issuer and each of the Investors whose signatures appear below (the “Signing
Investors”) hereby agree as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.1           Agreement.  The
Issuer and each of the Signing Investors whose signatures appear below approve
the amendment and restatement of the Original Warrants in the forms attached
hereto as:

     

    (a)           Exhibit A (Amended
and Restated Series A Warrant to Purchase Shares of Common Stock of BPO
Management Services, Inc.);

     

    (b)           Exhibit B (Amended
and Restated Series B Warrant to Purchase Shares of Common Stock of BPO
Management Services, Inc.);

     

    (c)           Exhibit C (Amended
and Restated Series C Warrant to Purchase Shares of Common Stock of BPO
Management Services, Inc.); and

     

    (d)           Exhibit D (Amended
and Restated Series D Warrant to Purchase Shares of Common Stock of BPO
Management Services, Inc.).

     

    ARTICLE
2

    MISCELLANEOUS
PROVISIONS.

     

    2.1           No Further
Agreements/Waivers.  Except as set forth herein and as
previously amended, the Original Warrants, as previously amended, and the
provisions of this Amended and Restated Warrant Acknowledgment, the provisions
hereof shall prevail.

     

    2.2           Counterparts.  This
Amended and Restated Warrant Acknowledgment 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 Amended and
Restated Warrant Acknowledgment shall be binding upon and shall inure to the
benefit of the successors and permitted assigns of the Issuer and the Signing
Investors.

     

    2.4           Entire Agreement.
 The Original
Warrant Agreements and the Amended and Restated Warrant Acknowledgment, all as
may have been previously amended, and as reflective of the terms hereof, contain
the entire understanding between the parties hereto and supersede 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.

     

    [Signatures on following
page(s).]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the undersigned have caused this Amended and Restated Warrant
Acknowledgement to be duly executed by their respective authorized officers as
of the date first above written.

     

     

    
      	 
      	
              COMPANY:

            
	 
      	 
      
	 
      	
              BPO
      Management Services, Inc.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:  

            
	 
      	
              Name:

              Title:

            
	 
      	 
      
	 
      	 
      
	 
      	
              INVESTOR:

            
	 
      	 
      
	 
      	By:  
	 
      	
              Name:

              Title:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
A

     

    
       

       

      THIS
AMENDED AND RESTATED WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN
OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

       

      AMENDED
AND RESTATED SERIES A WARRANT TO PURCHASE

      

      SHARES OF
COMMON STOCK

      

      OF

      

      BPO
MANAGEMENT SERVICES, INC.

      

      Expires
June 13, 2010

       

      
        	No.: W-A-07-
      __  	
                Number of Shares:
      ___________

              
	Date of Issuance:
      June 13, 2007 	 

      

       

       

      FOR VALUE
RECEIVED, the undersigned, BPO Management Services, Inc., a Delaware corporation
(together with its successors and assigns, the "Issuer"), hereby certifies that
_______________________________ or its registered assigns is entitled to
subscribe for and purchase, during the Term (as hereinafter defined), up to
____________________________________ (_____________) shares (subject to
adjustment as hereinafter provided) of the duly authorized, validly issued,
fully paid and non-assessable Common Stock of the Issuer, at an exercise price
per share equal to the Warrant Price then in effect, subject, however, to the
provisions and upon the terms and conditions hereinafter set
forth.  Capitalized terms used in this Warrant and not otherwise
defined herein shall have the respective meanings specified in Section 9
hereof.

       

      1.    Term.  The
term of this Warrant shall commence on June 13, 2007 and shall expire at 6:00
p.m., eastern time, on June 13, 2010 (such period being the
"Term").

       

      2.    Method of Exercise; Payment;
Issuance of New Warrant; Transfer and Exchange.

       

      (a)    Time of
Exercise.  The purchase rights represented by this Warrant may
be exercised in whole or in part during the Term.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      (b)    Method of
Exercise.  The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election (i) by certified or official bank
check or by wire transfer to an account designated by the Issuer, (ii) by
"cashless exercise" in accordance with the provisions of subsection (c) of this
Section 2, but only when a registration statement under the Securities Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

       

      (c)    Cashless
Exercise.  Notwithstanding any provisions herein to the
contrary and commencing one and a half (1.5) years following the Original Issue
Date if (i) the Per Share Market Value of one share of Common Stock is greater
than the Warrant Price (at the date of calculation as set forth below) and (ii)
a registration statement under the Securities Act providing for the resale of
the Warrant Stock is not then in effect by the date such registration statement
is required to be effective pursuant to the Registration Rights Agreement (as
defined in the Purchase Agreement) or not effective at any time during the
Effectiveness Period (as defined in the Registration Rights Agreement) in
accordance with the terms of the Registration Rights Agreement, unless the
registration statement is not effective as a result of the Issuer exercising its
rights under Section 3(n) of the Registration Rights Agreement, in lieu of
exercising this Warrant by payment of cash, the Holder may exercise this Warrant
by a cashless exercise and shall receive the number of shares of Common Stock
equal to an amount (as determined below) by surrender of this Warrant at the
principal office of the Issuer together with the properly endorsed Notice of
Exercise in which event the Issuer shall issue to the Holder a number of shares
of Common Stock computed using the following formula:

       

      X = Y -
(A)(Y)

          B

       

      
        	
                 
      

              	
                Where

              	
                X
      =

              	
                the
      number of shares of Common Stock to be issued to the
    Holder.

              
	 	 	 	 
	 	 	
                Y
      =
 	
                the
      number of shares of Common Stock purchasable upon exercise of all of the
      Warrant or, if only a portion of the Warrant is being exercised, the
      portion of the Warrant being exercised. 

              
	 	 	 	 
	 	 	
                A
      = 

              	
                the
      Warrant Price. 

              
	 	 	 	 
	 	 	
                B
      = 

              	
                the
      Per Share Market Value of one share of Common
  Stock. 

              

      

       

      
      

      
      

      (d)    Issuance of Stock
Certificates.  In the event of any exercise of this Warrant in
accordance with and subject to the terms and conditions hereof, certificates for
the shares of Warrant Stock so purchased shall be dated the date of such
exercise and delivered to the Holder hereof within a reasonable time, not
exceeding three (3) Trading Days after such exercise (the “Delivery Date”) or,
at the request of the Holder (provided that a registration statement under the
Securities Act providing for the resale of the Warrant Stock is then in effect),
issued and delivered to the Depository Trust Company (“DTC”) account on the
Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”)

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      within a
reasonable time, not exceeding three (3) Trading Days after such exercise, and
the Holder hereof shall be deemed for all purposes to be the holder of the
shares of Warrant Stock so purchased as of the date of such
exercise.  Notwithstanding the foregoing to the contrary, the Issuer
or its transfer agent shall only be obligated to issue and deliver the shares to
the DTC on a holder’s behalf via DWAC if such exercise is in connection with a
sale and the Issuer and its transfer agent are participating in DTC through the
DWAC system.  The Holder shall deliver this original Warrant, or an
indemnification undertaking with respect to such Warrant in the case of its
loss, theft or destruction, at such time that this Warrant is fully
exercised.  With respect to partial exercises of this Warrant, the
Issuer shall keep written records of the number of shares of Warrant Stock
exercised as of each date of exercise.

       

      (e)    Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Issuer fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Stock pursuant to an exercise on or before the Delivery
Date, and if after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Stock which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Issuer shall (1)
pay in cash to the Holder the amount by which (x) the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased exceeds (y) the amount obtained by multiplying (A) the number of
shares of Warrant Stock that the Issuer was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant Stock for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the immediately
preceding sentence the Issuer shall be required to pay the Holder
$1,000.  The Holder shall provide the Issuer written notice indicating
the amounts payable to the Holder in respect of the Buy-In, together with
applicable confirmations and other evidence reasonably requested by the
Issuer.  Nothing herein shall limit a Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Issuer’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of this Warrant as required pursuant to the
terms hereof.

       

      (f)    Transferability of
Warrant.  Subject to Section 2(h) hereof, this Warrant may be
transferred by a Holder, in whole or in part, without the consent of the
Issuer.  If transferred pursuant to this paragraph, this Warrant may
be transferred on the books of the Issuer by the Holder hereof in person or by
duly authorized attorney, upon surrender of this Warrant at the principal office
of the Issuer, properly endorsed (by the Holder executing an assignment in the
form attached hereto) and upon payment of any necessary transfer tax or other
governmental charge imposed upon such transfer.  This Warrant is
exchangeable at the principal office of the Issuer for Warrants to purchase the
same aggregate number of shares of Warrant Stock, each new Warrant to represent
the right to purchase such number of shares of Warrant Stock as the Holder
hereof shall designate at the time of such exchange.  All Warrants
issued on transfers or exchanges shall be dated the Original Issue Date and
shall be identical with this Warrant except as to the number of shares of
Warrant Stock issuable pursuant thereto.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

         

      

      (g)    Continuing Rights of
Holder.  The Issuer will, at the time of or at any time after
each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing the extent, if any, of its continuing obligation to
afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.

       

      (h)    Compliance with Securities
Laws.

       

      (i)    The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and
the shares of Warrant Stock to be issued upon exercise hereof are being acquired
solely for the Holder's own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued upon
exercise hereof except pursuant to an effective registration statement, or an
exemption from registration, under the Securities Act and any applicable state
securities laws.

       

      (ii)    Except as
provided in paragraph (iii) below, this Warrant and all certificates
representing shares of Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following
form:

       

      THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

       

      (iii)   The
Issuer agrees to reissue this Warrant or certificates representing any of the
Warrant Stock, without the legend set forth above if at such time, prior to
making any transfer of any such securities, the Holder shall give written notice
to the Issuer describing the manner and terms of such transfer.  Such
proposed transfer will not be effected until: (a) either (i) the Issuer has
received an opinion of counsel reasonably satisfactory to the Issuer, to the
effect that the registration of such securities under the Securities Act is not
required in connection with such proposed transfer, (ii) a registration
statement under the Securities Act covering such proposed disposition has been
filed by the Issuer with the Securities and Exchange Commission and has become
effective under the Securities Act and the Holder has represented that the
Warrant Stock has been or will be sold, (iii) the 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

         

      

      Issuer
has received other evidence reasonably satisfactory to the Issuer that such
registration and qualification under the Securities Act and state securities
laws are not required, or (iv) the Holder provides the Issuer with reasonable
assurances that such security can be sold pursuant to Rule 144 under the
Securities Act; and (b) either (i) the Issuer has received an opinion of counsel
reasonably satisfactory to the Issuer, to the effect that registration or
qualification under the securities or "blue sky" laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or "blue sky" laws has been effected or a valid
exemption exists with respect thereto.  The Issuer will respond to any
such notice from a holder within five (5) Trading Days.  In the case
of any proposed transfer under this Section 2(h), the Issuer will use reasonable
efforts to comply with any such applicable state securities or "blue sky" laws,
but shall in no event be required, (x) to qualify to do business in any state
where it is not then qualified, (y) to take any action that would subject it to
tax or to the general service of process in any state where it is not then
subject, or (z) to comply with state securities or “blue sky” laws of any state
for which registration by coordination is unavailable to the
Issuer.  The restrictions on transfer contained in this Section 2(h)
shall be in addition to, and not by way of limitation of, any other restrictions
on transfer contained in any other section of this Warrant.  Whenever
a certificate representing the Warrant Stock is required to be issued to a the
Holder without a legend, in lieu of delivering physical certificates
representing the Warrant Stock, the Issuer shall use its reasonable best efforts
to cause its transfer agent to electronically transmit the Warrant Stock to the
Holder by crediting the account of the Holder's Prime Broker with DTC through
its DWAC system (to the extent not inconsistent with any provisions of this
Warrant or the Purchase Agreement).  Notwithstanding the foregoing to
the contrary, the Issuer or its transfer agent shall only be obligated to issue
and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise
is in connection with a sale and the Issuer and its transfer agent are
participating in DTC through the DWAC system.

       

      (i)    Accredited Investor
Status.  In no event may the Holder exercise this Warrant in
whole or in part unless the Holder is then an “accredited investor” as defined
in Regulation D under the Securities Act.

       

      3.    Stock Fully Paid;
Reservation and Listing of Shares; Covenants.

       

      (a)    Stock Fully
Paid.  The Issuer represents, warrants, covenants and agrees
that all shares of Warrant Stock which may be issued upon the exercise of this
Warrant or otherwise hereunder will, when issued in accordance with the terms of
this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by or through the
Issuer.  The Issuer further covenants and agrees that during the
period within which this Warrant may be exercised, the Issuer will at all times
have authorized and reserved for the purpose of issuance upon exercise of this
Warrant a number of shares of Common Stock equal to at least one hundred twenty
percent (120%) of the aggregate number of shares of Common Stock issuable upon
exercise of this Warrant.

       

      (b)    Reservation.  If
any shares of Common Stock required to be reserved for issuance upon exercise of
this Warrant or as otherwise provided hereunder require registration or
qualification with any governmental authority under any federal or state law
before such shares may be so issued, the Issuer will in good faith use its best
efforts as expeditiously as possible at its expense to cause such shares to be
duly registered or qualified.  If the Issuer shall list any shares of
Common Stock on any securities exchange or market it will, at its expense, list
thereon, maintain and increase when necessary such listing, of, all shares of
Warrant Stock from time to time issued upon exercise of this Warrant or as
otherwise provided hereunder (provided that such Warrant Stock has been
registered pursuant to a registration statement under the Securities Act then in
effect), and, to the extent permissible under the applicable securities exchange
rules, all unissued shares of Warrant Stock which are at any time issuable
hereunder, so long as any shares of Common Stock shall be so
listed.  The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities which the Holder
of this Warrant shall be entitled to receive upon the exercise of this Warrant
if at the time any securities of the same class shall be listed on such
securities exchange or market by the Issuer.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

         

      

      (c)    Loss, Theft, Destruction of
Warrants.  Upon receipt of evidence satisfactory to the Issuer
of the ownership of and the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon receipt of
indemnity or security satisfactory to the Issuer or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Issuer will
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
number of shares of Common Stock.

       

      4.    Adjustment of Warrant Price
and Number of Shares Issuable Upon Exercise.  The Warrant Price
and the Warrant Share Number shall be subject to adjustment from time to time as
set forth in this Section 4.  The Issuer shall give the Holder notice
of any event described below which requires an adjustment pursuant to this
Section 4 in accordance with the notice provisions set forth in Section
5.

       

      (a)    Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or
Sale.

       

      (i)    In case
the Issuer after the Original Issue Date shall do any of the following (each, a
"Triggering Event"): (a) consolidate or merge with or into any other Person and
the Issuer shall not be the continuing or surviving corporation of such
consolidation or merger, or (b) permit any other Person to consolidate with or
merge into the Issuer and the Issuer shall be the continuing or surviving Person
but, in connection with such consolidation or merger, any Capital Stock of the
Issuer shall be changed into or exchanged for Securities of any other Person or
cash or any other property, or (c) transfer all or substantially all of its
properties or assets to any other Person, or (d) effect a capital reorganization
or reclassification of its Capital Stock, then, and in the case of each such
Triggering Event, proper provision shall be made to the Warrant Price and the
number of shares of Warrant Stock that may be purchased upon exercise of this
Warrant so that, upon the basis and the terms and in the manner provided in this
Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof
at any time after the consummation of such Triggering Event, to the extent this
Warrant is not exercised prior to such Triggering Event, to receive at the
Warrant Price as adjusted to take into account the consummation of such
Triggering Event, in lieu of the Common Stock issuable upon such exercise of
this Warrant prior to such Triggering Event, the Securities, to which such
Holder would have been entitled upon the consummation of such Triggering Event
if such Holder had exercised the rights represented by this Warrant immediately
prior thereto.  Immediately upon the occurrence of a Triggering Event,
the Issuer shall notify the Holder in writing of such Triggering Event and

      provide
the calculations in determining the number of shares of Warrant Stock issuable
upon exercise of the new warrant and the adjusted Warrant Price.  Upon
the Holder’s request, the continuing or surviving corporation as a result of
such Triggering Event shall issue to the Holder a new warrant of like tenor
evidencing the right to purchase the adjusted number of shares of Warrant Stock
and the adjusted Warrant Price pursuant to the terms and provisions of this
Section 4(a)(i).  Notwithstanding the foregoing to the contrary, this
Section 4(a)(i) shall only apply if the surviving entity pursuant to any such
Triggering Event is a company that has a class of equity securities registered
pursuant to the Securities Exchange Act of 1934, as amended, and its common
stock is listed or quoted on a national securities exchange, national automated
quotation system or the OTC Bulletin Board.  In the event that the
surviving entity pursuant to any such Triggering Event is not a public company
that is registered pursuant to the Securities Exchange Act of 1934, as amended,
or its common stock is not listed or quoted on a national securities exchange,
national automated quotation system or the OTC Bulletin Board, then the Holder
shall have the right to demand that the Issuer pay to the Holder an amount in
cash equal to the value of this Warrant as of the date of the Triggering Event
calculated in accordance with the Black-Scholes formula.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (ii)    In the
event that the Holder has elected not to exercise this Warrant prior to the
consummation of a Triggering Event, so long as the surviving entity pursuant to
any Triggering Event is a company that has a class of equity securities
registered pursuant to the Securities Exchange Act of 1934, as amended, and its
common stock is listed or quoted on a national securities exchange, national
automated quotation system or the OTC Bulletin Board, the surviving entity
and/or each Person (other than the Issuer) which may be required to deliver any
Securities upon the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the Holder of
this Warrant, (A) the obligations of the Issuer under this Warrant (and if the
Issuer shall survive the consummation of such Triggering Event, such assumption
shall be in addition to, and shall not release the Issuer from, any continuing
obligations of the Issuer under this Warrant) and (B) the obligation to deliver
to such Holder such Securities as, in accordance with the foregoing provisions
of this subsection (a), such Holder shall be entitled to receive, and the
surviving entity and/or each such Person shall have similarly delivered to such
Holder an opinion of counsel for the surviving entity and/or each such Person,
which counsel shall be reasonably satisfactory to such Holder, or in the
alternative, a written acknowledgement executed by the President or Chief
Financial Officer of the Issuer, stating that this Warrant Amended Warrant shall
thereafter continue in full force and effect and the terms hereof (including,
without limitation, all of the provisions of this subsection (a)) shall be
applicable to the Securities which the surviving entity and/or each such Person
may be required to deliver upon any exercise of this Warrant or the exercise of
any rights pursuant hereto.

       

      (b)    Subdivisions and
Combinations.  If at any time the Issuer shall:

       

      (i)    subdivide
its outstanding shares of Common Stock into a larger number of shares of Common
Stock, or

       

      (ii)    combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.

       

      (c)    Other Provisions applicable
to Adjustments under this Section.  The following provisions
shall be applicable to the making of adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect provided for in this Section 4:

       

      (i)    When Adjustments to Be
Made.  The adjustments required by this Section 4 shall be made
whenever and as often as any specified event requiring an adjustment shall
occur, except that any adjustment of the number of shares of Common Stock for
which this Warrant is exercisable that would otherwise be required may be
postponed (except in the case of a subdivision or combination of shares of the
Common Stock, as provided for in Section 4(b)) up to, but not beyond the date of
exercise if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than one percent (1%) of the shares of
Common Stock for which this Warrant is exercisable immediately prior to the
making of such adjustment.  Any adjustment representing a change of
less than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made(x) as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment or (y) on the date of exercise.  For the purpose
of any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

         

      

      (ii)    Fractional
Interests.  In computing ad-justments under this Section 4,
fractional interests in Common Stock shall be taken into account to the near-est
one one-hundredth (1/100th) of a share.

       

      (d)    Form of Warrant after
Adjustments.  The form of this Warrant need not be changed
because of any adjustments in the Warrant Price or the number and kind of
Securities purchasable upon the exercise of this Warrant.

       

      5.    Notice of
Adjustments.  Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment.  Any dispute between the Issuer and
the Holder of this Warrant with respect to the matters set forth in such
certificate may at the option of the Holder of this Warrant be submitted to a
national or regional accounting firm reasonably acceptable to the Issuer and the
Holder, provided that the Issuer shall have ten (10) days after receipt of
notice from such Holder of its selection of such firm to object thereto, in
which case such Holder shall select another such firm and the Issuer shall have
no such right of objection.  The firm selected by the Holder of this
Warrant as provided in the preceding sentence shall be instructed to deliver a
written opinion as to such matters to the Issuer and such Holder within thirty
(30) days after submission to it of such dispute.  Such opinion shall
be final and binding on the parties hereto.  The costs and expenses of
the initial accounting firm shall be paid equally by the Issuer and the Holder
and, in the case of an objection by the Issuer, the costs and expenses of the
subsequent accounting firm shall be paid in full by the Issuer.

       

      6.    Fractional
Shares.  No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.

       

      7.    Ownership Cap and Exercise
Restriction.  Notwithstanding anything to the contrary set
forth in this Warrant, at no time may a Holder of this Warrant exercise this
Warrant if the number of shares of Common Stock to be issued pursuant to such
exercise would exceed, when aggregated with all other shares of Common Stock
owned by such Holder and its affiliates at such time, the number of shares of
Common Stock which would result in such Holder and its affiliates beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act and
the rules thereunder) in excess of 9.99% of the then issued and outstanding
shares of Common Stock; provided, however, that upon a holder of this Warrant
providing the Issuer with sixty-one (61) days notice (pursuant to Section 13
hereof) (the "Waiver Notice") that such Holder would like to waive this Section
7 with regard to any or all shares of Common Stock issuable upon exercise of
this Warrant, this Section 7 will be of no force or effect with regard to all or
a portion of the Warrant referenced in the Waiver Notice; provided, further,
that this provision shall be of no further force or effect during the sixty-one
(61) days immediately preceding the expiration of the term of this
Warrant.  Notwithstanding the foregoing, these exercise restrictions
shall not be applicable to Renaissance Capital Group, Inc.  and its
affiliates (collectively, "Renn"), if Renn so notifies the Issuer (either in
writing or by email) prior to the date of issuance of the securities to which
this paragraph is applicable.

       

      8.    Definitions.  For
the purposes of this Warrant, the following terms have the following
meanings:

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

         

      

      “Board" shall mean the
Board of Directors of the Issuer.

       

      "Capital Stock" means
and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.

       

      "Certificate of
Designation" means the Certificate of Designation of the Relative Rights
and Preferences of the Series D Convertible Preferred Stock of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.

       

      "Certificate of
Incorporation" means the Certificate of Incorporation of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.

       

      "Common Stock" means
the Common Stock, $0.01 par value per share, of the Issuer and any other Capital
Stock into which such stock may hereafter be changed.

       

      "Governmental
Authority" means any governmental, regulatory or self-regulatory entity,
department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.

       

      "Holders" mean the
Persons who shall from time to time own any Warrant.  The term
"Holder" means one of the Holders.

       

      "Independent
Appraiser" means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Issuer) that is regularly engaged in the business of appraising the
Capital Stock or assets of corporations or other entities as going concerns, and
which is not affiliated with either the Issuer or the Holder of any
Warrant.

       

      "Issuer" means BPO
Management Services, Inc., a Delaware corporation, and its
successors.

       

      "Majority Holders"
means at any time the Holders of Warrants exercisable for a majority of the
shares of Warrant Stock issuable under the then-outstanding
Warrants.

       

      "Original Issue Date"
means June 13, 2007.

       

      "OTC Bulletin Board"
means the over-the-counter electronic bulletin board.

       

      "Other Common" means
any other Capital Stock of the Issuer of any class which shall be authorized at
any time after the date of this Warrant (other than Common Stock) and which
shall have the right to participate in the distribution of earnings and assets
of the Issuer without limitation as to amount.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

         

      

      “Outstanding Common
Stock” means, at any given time, the aggregate amount of outstanding
shares of Common Stock, assuming full exercise, conversion or exchange (as
applicable) of all options, warrants and other Securities which are convertible
into or exercisable or exchangeable for, and any right to subscribe for, shares
of Common Stock that are outstanding at such time.

       

      "Person" means an
individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.

       

      "Per Share Market
Value" means on any particular date (a) the last closing bid price per
share of the Common Stock on such date on the OTC Bulletin Board or a registered
national stock exchange on which the Common Stock is then listed, or if there is
no such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (b) if the Common
Stock is not quoted or listed then on the OTC Bulletin Board or any registered
national stock exchange, the last closing bid price for a share of Common Stock
in the over-the-counter market, as reported by the OTC Bulletin Board or in Pink
Sheets, LLC or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or Pink Sheets, LLC (or
similar organization or agency succeeding to its functions of reporting prices),
then the average of the "Pink Sheet" quotes for the applicable Trading Days
preceding such date of determination, or (d) if the Common Stock is not then
publicly traded the fair market value of a share of Common Stock as determined
by an Independent Appraiser selected in good faith by the Majority Holders;
provided, however, that the Issuer, after receipt of the determination by such
Independent Appraiser, shall have the right to select an additional Independent
Appraiser, in which case, the fair market value shall be equal to the average of
the determinations by each such Independent Appraiser; and provided, further
that all determinations of the Per Share Market Value shall be appropriately
adjusted for any stock dividends, stock splits or other similar transactions
during such period.  The determination of fair market value by an
Independent Appraiser shall be based upon the fair market value of the Issuer
determined on a going concern basis as between a willing buyer and a willing
seller and taking into account all relevant factors determinative of value, and
shall be final and binding on all parties.  In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.

       

      "Purchase Agreement"
means the Series D Convertible Preferred Stock Purchase Agreement dated as of
June 13, 2007, among the Issuer and the Purchasers.

       

      "Purchasers" means the
purchasers of the Series D Convertible Preferred Stock and the Warrants issued
by the Issuer pursuant to the Purchase Agreement.

       

      "Securities" means any
debt or equity securities of the Issuer, whether now or hereafter authorized,
any instrument convertible into or exchangeable for Securities or a Security,
and any option, warrant or other right to purchase or acquire any
Security.  "Security" means one of the Securities.

       

      "Securities Act" means
the Securities Act of 1933, as amended, or any similar federal statute then in
effect.

       

      "Subsidiary" means any
corporation at least 50% of whose outstanding Voting Stock shall at the time be
owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

         

      

      "Term" has the meaning
specified in Section 1 hereof.

       

      "Trading Day" means
(a) a day on which the Common Stock is quoted on the OTC Bulletin Board, or (b)
if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by Pink
Sheets, LLC (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall
mean any day except Saturday, Sunday and any day which shall be a legal holiday
or a day on which banking institutions in the State of New York are authorized
or required by law or other government action to close.

       

      "Voting Stock" means,
as applied to the Capital Stock of any corporation, Capital Stock of any class
or classes (however designated) having ordinary voting power for the election of
a majority of the members of the Board (or other governing body) of such
corporation, other than Capital Stock having such power only by reason of the
happening of a contingency.

       

      "Warrants" means the
Warrants issued and sold pursuant to the Purchase Agreement, including, without
limitation, this Warrant, and any other warrants of like tenor issued in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

       

      "Warrant Price"
initially means $0.90, as such price may be adjusted from time to time in
accordance with the adjustments specified in this Warrant, including Section 4
hereto.

       

      "Warrant Share Number"
means at any time the aggregate number of shares of Warrant Stock which may at
such time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made under
the terms hereof.

       

      "Warrant Stock" means
Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants.

       

      9.    Other
Notices.  In case at any time:

       

      
        	
                 
      

              	
                (A)

              	
                the
      Issuer shall make any distributions to the holders of Common Stock;
      or

              

      

       

      
        	
                 
      

              	
                (B)

              	
                the
      Issuer shall authorize the granting to all holders of its Common Stock of
      rights to subscribe for or purchase any shares of Capital Stock of any
      class or other rights; or

              

      

       

      
        	
                 
      

              	
                (C)

              	
                there
      shall be any reclassification of the Capital Stock of the Issuer;
      or

              

      

       

      
        	
                 
      

              	
                (D)

              	
                there
      shall be any capital reorganization by the Issuer;
  or

              

      

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (E)

              	
                there
      shall be any (i) consolidation or merger involving the Issuer or (ii)
      sale, transfer or other disposition of all or substantially all of the
      Issuer's property, assets or business (except a merger or other
      reorganization in which the Issuer shall be the surviving corporation and
      its shares of Capital Stock shall continue to be outstanding and unchanged
      and except a consolidation, merger, sale, transfer or other disposition
      involving a wholly-owned Subsidiary);
or

              

      

       

      
        	
                 
      

              	
                (F)

              	
                there
      shall be a voluntary or involuntary dissolution, liquidation or winding-up
      of the Issuer or any partial liquidation of the Issuer or distribution to
      holders of Common Stock;

              

      

       

      then, in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take
place.  Such notice also shall specify the date as of which the
holders of Common Stock of record shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
certificates for Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be.  Such
notice shall be given at least twenty (20) days prior to the action in question
and not less than ten (10) days prior to the record date or the date on which
the Issuer's transfer books are closed in respect thereto.  This
Warrant entitles the Holder to receive copies of all financial and other
information distributed or required to be distributed to the holders of the
Common Stock.

       

      10.   Amendment and
Waiver.  Any term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith may be waived (either generally
or in a particular instance), by a written instrument or written instruments
executed by the Issuer and the Majority Holders; provided, however, that no such
amendment or waiver shall reduce the Warrant Share Number, increase the Warrant
Price, shorten the period during which this Warrant may be exercised or modify
any provision of this Section 10 without the consent of the Holder of this
Warrant.  No consideration shall be offered or paid to any person to
amend or consent to a waiver or modification of any provision of this Warrant
unless the same consideration is also offered to all holders of the
Warrants.

       

      11.   Governing Law;
Jurisdiction.  This Warrant shall be governed by and construed
in accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction.  This
Warrant shall not be interpreted or construed with any presumption against the
party causing this Warrant to be drafted.  The Issuer and the Holder
agree that venue for any dispute arising under this Warrant will lie exclusively
in the state or federal courts located in New York County, New York, and the
parties irrevocably waive any right to raise forum non conveniens or any other
argument that New York is not the proper venue.  The Issuer and the
Holder irrevocably consent to personal jurisdiction in the state and federal
courts of the state of New York.  The Issuer and the Holder consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing in this Section 12
shall affect or limit any right to serve process in any other manner permitted
by law.  The Issuer and the Holder hereby agree that the prevailing
party in any suit, action or proceeding arising out of or relating to this
Warrant or the Purchase Agreement, shall be entitled to reimbursement for
reasonable legal fees from the non-prevailing party.  The parties
hereby waive all rights to a trial by jury.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

         

      

      12.   Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by telecopy, e-mail or facsimile at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first
occur.  The addresses for such communications shall be:

       

      If to the
Issuer:

      BPO
Management Services, Inc.

      1290
N.  Hancock, Ste 200

      Anaheim,
CA 92807

      Attention:
Chief Executive Officer

      Tel.  No.:
(714) 974-2670

      Fax No.:
(714) 974-4771

      E-mail:
patrick.dolan@bpoms.com

      

      with
copies (which copies shall not constitute notice) to:

      

      Bryan
Cave LLP

      3161
Michelson Drive, Suite 1500

      Irvine,
CA 92612

      Attention:
Randolf W.  Katz, Esq.

      Tel.  No.:
(949) 223-7103

      Fax No.:
(949) 223-7100

      E-mail:
rwkatz@bryancavellp.com

      

      and

      Cornman
& Swartz

      19800
MacArthur Blvd., Suite 820

      Irvine,
CA 92612

      Attention:
Jack T.  Cornman, Esq.

      Tel.  No.:
(949) 224-1500

      Fax No.:
(949) 224-1505

      

      If to any
Holder: At the address of such Holder set forth on Exhibit A to the Purchase
Agreement or as specified in writing by such Holder with copies to:

      

      Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

         

      

      13.   Warrant
Agent.  The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.

       

      14.   Remedies.  The
Issuer stipulates that the remedies at law of the Holder of this Warrant in the
event of any default or threatened default by the Issuer in the performance of
or compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

       

      15.   Successors and
Assigns.  This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors and assigns of the
Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.

       

      16.   Modification and
Severability.  If, in any action before any court or agency
legally empowered to enforce any provision contained herein, any provision
hereof is found to be unenforceable, then such provision shall be deemed
modified to the extent necessary to make it enforceable by such court or
agency.  If any such provision is not enforceable as set forth in the
preceding sentence, the unenforceability of such provision shall not affect the
other provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.

       

      17.   Headings.  The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.

       

      

       

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

       

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      IN
WITNESS WHEREOF, the Issuer has executed this Amended and Restated Series A
Warrant as of the day and year first above written.

       

      
      

       

      
        	 	
                BPO
      MANAGEMENT SERVICES, INC.

                

                By:      
      ____________________________

                Name:

                Title: 

              

      

       

       

      
 

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      
EXERCISE
FORM

      AMENDED
AND RESTATED SERIES A WARRANT

      

      BPO
MANAGEMENT SERVICES, INC.

      

      The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Common Stock of BPO Management
Services, Inc.  covered by the within Warrant.

       

      Dated:
_________________

       

      
        	 	
                Signature      
      ________________________________

                Address        
      ________________________________

                                       
      ________________________________    

              

      

      

      Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: _________________________

       

      The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.

       

      The
undersigned intends that payment of the Warrant Price shall be made as (check
one):

       

      Cash
Exercise_______

       

      Cashless
Exercise_______

       

      If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by
certified or official bank check (or via wire transfer) to the Issuer in
accordance with the terms of the Warrant.

       

      If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________.  The Issuer
shall pay a cash adjustment in respect of the fractional portion of the product
of the calculation set forth below in an amount equal to the product of the
fractional portion of such product and the Per Share Market Value on the date of
exercise, which product is ____________.

       

      X = Y -
(A)(Y)

                      
B

      

      Where:

       

      The
number of shares of Common Stock to be issued to the Holder
__________________(“X”).

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

         

      

      The
number of shares of Common Stock purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised ___________________________ (“Y”).

       

      The
Warrant Price ______________ (“A”).

       

      The Per
Share Market Value of one share of Common Stock _______________________
(“B”).

       

      ASSIGNMENT

      

      FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

       

      
        Dated:
_________________

         

        
          	 	
                  Signature      
      ________________________________

                  Address        
      ________________________________

                                         
      ________________________________    

                

        

        
PARTIAL
ASSIGNMENT

      

      

      FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.

       

      
        Dated:
_________________

         

      

      
        
          	 	
                  Signature      
      ________________________________

                  Address        
      ________________________________

                                         
      ________________________________    

                

        

        
FOR
USE BY THE ISSUER ONLY:

      

      

      This
Warrant No.  W-___ canceled (or transferred or exchanged) this _____
day of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No.  W-_____ issued for ____ shares of Common
Stock in the name of _______________.

       

       

      
 

    

    
      
         

      

      
        17 

        
          

        

      

      
         

      

    

    Exhibit
B

     

    
       

       

      THIS
AMENDED AND RESTATED WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN
OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

      

      

      AMENDED
AND RESTATED SERIES B WARRANT TO PURCHASE

      

      SHARES OF
COMMON STOCK

      

      OF

      

      BPO
MANAGEMENT SERVICES, INC.

      

      Expires
June 13, 2012

       

      

       

      
        	No.: W-B-07-
      __	
                Number of Shares:
      ___________

              

      

      Date of
Issuance: June 13, 2007

      

      

      FOR VALUE
RECEIVED, the undersigned, BPO Management Services, Inc., a Delaware corporation
(together with its successors and assigns, the "Issuer"), hereby certifies that
_______________________________ or its registered assigns is entitled to
subscribe for and purchase, during the Term (as hereinafter defined), up to
____________________________________ (_____________) shares (subject to
adjustment as hereinafter provided) of the duly authorized, validly issued,
fully paid and non-assessable Common Stock of the Issuer, at an exercise price
per share equal to the Warrant Price then in effect, subject, however, to the
provisions and upon the terms and conditions hereinafter set
forth.  Capitalized terms used in this Warrant and not otherwise
defined herein shall have the respective meanings specified in Section 9
hereof.

       

      1.    Term.  The
term of this Warrant shall commence on June 13, 2007 and shall expire at 6:00
p.m., eastern time, on June 13, 2012 (such period being the
"Term").

       

      2.    Method of Exercise; Payment;
Issuance of New Warrant; Transfer and Exchange.

       

      (a)    Time of
Exercise.  The purchase rights represented by this Warrant may
be exercised in whole or in part during the Term.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      (b)    Method of
Exercise.  The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election (i) by certified or official bank
check or by wire transfer to an account designated by the Issuer, (ii) by
"cashless exercise" in accordance with the provisions of subsection (c) of this
Section 2, but only when a registration statement under the Securities Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

       

      (c)    Cashless
Exercise.  Notwithstanding any provisions herein to the
contrary and commencing one and a half (1.5) years following the Original Issue
Date if (i) the Per Share Market Value of one share of Common Stock is greater
than the Warrant Price (at the date of calculation as set forth below) and (ii)
a registration statement under the Securities Act providing for the resale of
the Warrant Stock is not then in effect by the date such registration statement
is required to be effective pursuant to the Registration Rights Agreement (as
defined in the Purchase Agreement) or not effective at any time during the
Effectiveness Period (as defined in the Registration Rights Agreement) in
accordance with the terms of the Registration Rights Agreement, unless the
registration statement is not effective as a result of the Issuer exercising its
rights under Section 3(n) of the Registration Rights Agreement, in lieu of
exercising this Warrant by payment of cash, the Holder may exercise this Warrant
by a cashless exercise and shall receive the number of shares of Common Stock
equal to an amount (as determined below) by surrender of this Warrant at the
principal office of the Issuer together with the properly endorsed Notice of
Exercise in which event the Issuer shall issue to the Holder a number of shares
of Common Stock computed using the following formula:

       

      X = Y -
(A)(Y)

       

      B

       

      
        	
                 
      

              	
                Where

              	
                X
      =

              	
                the
      number of shares of Common Stock to be issued to the
    Holder.

              

      

       

      
        	
                 
      

              	
                Y
      =

              	
                the
      number of shares of Common Stock purchasable upon exercise of all of the
      Warrant or, if only a portion of the Warrant is being exercised, the
      portion of the Warrant being
exercised.

              

      

       

      
        	
                 
      

              	
                A
      =

              	
                the
      Warrant Price.

              

      

       

      
        	
                 
      

              	
                B
      =

              	
                the
      Per Share Market Value of one share of Common
  Stock.

              

      

       

      (d)    Issuance of Stock
Certificates.  In the event of any exercise of this Warrant in
accordance with and subject to the terms and conditions hereof, certificates for
the shares of Warrant Stock so purchased shall be dated the date of such
exercise and delivered to the Holder hereof within a reasonable time, not
exceeding three (3) Trading Days after such exercise (the “Delivery Date”) or,
at the request of the Holder (provided that a registration statement under the
Securities Act providing for the resale of the Warrant Stock is then in effect),
issued and delivered to the Depository Trust Company (“DTC”) account on the
Holder’s behalf via the Deposit Withdrawal Agent Commission System
(“DWAC”)

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      within a
reasonable time, not exceeding three (3) Trading Days after such exercise, and
the Holder hereof shall be deemed for all purposes to be the holder of the
shares of Warrant Stock so purchased as of the date of such
exercise.  Notwithstanding the foregoing to the contrary, the Issuer
or its transfer agent shall only be obligated to issue and deliver the shares to
the DTC on a holder’s behalf via DWAC if such exercise is in connection with a
sale and the Issuer and its transfer agent are participating in DTC through the
DWAC system.  The Holder shall deliver this original Warrant, or an
indemnification undertaking with respect to such Warrant in the case of its
loss, theft or destruction, at such time that this Warrant is fully
exercised.  With respect to partial exercises of this Warrant, the
Issuer shall keep written records of the number of shares of Warrant Stock
exercised as of each date of exercise.

       

      (e)    Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Issuer fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Stock pursuant to an exercise on or before the Delivery
Date, and if after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Stock which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Issuer shall (1)
pay in cash to the Holder the amount by which (x) the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased exceeds (y) the amount obtained by multiplying (A) the number of
shares of Warrant Stock that the Issuer was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant Stock for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the immediately
preceding sentence the Issuer shall be required to pay the Holder
$1,000.  The Holder shall provide the Issuer written notice indicating
the amounts payable to the Holder in respect of the Buy-In, together with
applicable confirmations and other evidence reasonably requested by the
Issuer.  Nothing herein shall limit a Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Issuer’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of this Warrant as required pursuant to the
terms hereof.

       

      (f)    Transferability of
Warrant.  Subject to Section 2(h) hereof, this Warrant may be
transferred by a Holder, in whole or in part, without the consent of the
Issuer.  If transferred pursuant to this paragraph, this Warrant may
be transferred on the books of the Issuer by the Holder hereof in person or by
duly authorized attorney, upon surrender of this Warrant at the principal office
of the Issuer, properly endorsed (by the Holder executing an assignment in the
form attached hereto) and upon payment of any necessary transfer tax or other
governmental charge imposed upon such transfer.  This Warrant is
exchangeable at the principal office of the Issuer for Warrants to purchase the
same aggregate number of shares of Warrant Stock, each new Warrant to represent
the right to purchase such number of shares of Warrant Stock as the Holder
hereof shall designate at the time of such exchange.  All Warrants
issued on transfers or exchanges shall be dated the Original Issue Date and
shall be identical with this Warrant except as to the number of shares of
Warrant Stock issuable pursuant thereto.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (g)    Continuing Rights of
Holder.  The Issuer will, at the time of or at any time after
each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing the extent, if any, of its continuing obligation to
afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.

       

      (h)    Compliance with Securities
Laws.

       

      (i)    The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and
the shares of Warrant Stock to be issued upon exercise hereof are being acquired
solely for the Holder's own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued upon
exercise hereof except pursuant to an effective registration statement, or an
exemption from registration, under the Securities Act and any applicable state
securities laws.

       

      (ii)    Except as
provided in paragraph (iii) below, this Warrant and all certificates
representing shares of Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following
form:

       

      THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

       

      (iii)    The
Issuer agrees to reissue this Warrant or certificates representing any of the
Warrant Stock, without the legend set forth above if at such time, prior to
making any transfer of any such securities, the Holder shall give written notice
to the Issuer describing the manner and terms of such transfer.  Such
proposed transfer will not be effected until: (a) either (i) the Issuer has
received an opinion of counsel reasonably satisfactory to the Issuer, to the
effect that the registration of such securities under the Securities Act is not
required in connection with such proposed transfer, (ii) a registration
statement under the Securities Act covering such proposed disposition has been
filed by the Issuer with the Securities and Exchange Commission and has become
effective under the Securities Act and the Holder has represented that the
Warrant Stock has been or will be sold, (iii) the

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      Issuer
has received other evidence reasonably satisfactory to the Issuer that such
registration and qualification under the Securities Act and state securities
laws are not required, or (iv) the Holder provides the Issuer with reasonable
assurances that such security can be sold pursuant to Rule 144 under the
Securities Act; and (b) either (i) the Issuer has received an opinion of counsel
reasonably satisfactory to the Issuer, to the effect that registration or
qualification under the securities or "blue sky" laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or "blue sky" laws has been effected or a valid
exemption exists with respect thereto.  The Issuer will respond to any
such notice from a holder within five (5) Trading Days.  In the case
of any proposed transfer under this Section 2(h), the Issuer will use reasonable
efforts to comply with any such applicable state securities or "blue sky" laws,
but shall in no event be required, (x) to qualify to do business in any state
where it is not then qualified, (y) to take any action that would subject it to
tax or to the general service of process in any state where it is not then
subject, or (z) to comply with state securities or “blue sky” laws of any state
for which registration by coordination is unavailable to the
Issuer.  The restrictions on transfer contained in this Section 2(h)
shall be in addition to, and not by way of limitation of, any other restrictions
on transfer contained in any other section of this Warrant.  Whenever
a certificate representing the Warrant Stock is required to be issued to a the
Holder without a legend, in lieu of delivering physical certificates
representing the Warrant Stock, the Issuer shall use its reasonable best efforts
to cause its transfer agent to electronically transmit the Warrant Stock to the
Holder by crediting the account of the Holder's Prime Broker with DTC through
its DWAC system (to the extent not inconsistent with any provisions of this
Warrant or the Purchase Agreement).  Notwithstanding the foregoing to
the contrary, the Issuer or its transfer agent shall only be obligated to issue
and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise
is in connection with a sale and the Issuer and its transfer agent are
participating in DTC through the DWAC system.

       

      (i)    Accredited Investor
Status.  In no event may the Holder exercise this Warrant in
whole or in part unless the Holder is then an “accredited investor” as defined
in Regulation D under the Securities Act.

       

      3.    Stock Fully Paid;
Reservation and Listing of Shares; Covenants.

       

      (a)    Stock Fully
Paid.  The Issuer represents, warrants, covenants and agrees
that all shares of Warrant Stock which may be issued upon the exercise of this
Warrant or otherwise hereunder will, when issued in accordance with the terms of
this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by or through the
Issuer.  The Issuer further covenants and agrees that during the
period within which this Warrant may be exercised, the Issuer will at all times
have authorized and reserved for the purpose of issuance upon exercise of this
Warrant a number of shares of Common Stock equal to at least one hundred twenty
percent (120%) of the aggregate number of shares of Common Stock issuable upon
exercise of this Warrant.

       

      (b)    Reservation.  If
any shares of Common Stock required to be reserved for issuance upon exercise of
this Warrant or as otherwise provided hereunder require registration or
qualification with any governmental authority under any federal or state law
before such shares may be so issued, the Issuer will in good faith use its best
efforts as expeditiously as possible at its expense to cause such shares to be
duly registered or qualified.  If the Issuer shall list any shares of
Common Stock on any securities exchange or market it will, at its expense, list
thereon, maintain and increase when necessary such listing, of, all shares of
Warrant Stock from time to time issued upon exercise of this Warrant or as
otherwise provided hereunder (provided that such Warrant Stock has been
registered pursuant to a registration statement under the Securities Act then in
effect), and, to the extent

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      permissible
under the applicable securities exchange rules, all unissued shares of Warrant
Stock which are at any time issuable hereunder, so long as any shares of Common
Stock shall be so listed.  The Issuer will also so list on each
securities exchange or market, and will maintain such listing of, any other
securities which the Holder of this Warrant shall be entitled to receive upon
the exercise of this Warrant if at the time any securities of the same class
shall be listed on such securities exchange or market by the
Issuer.

       

      (c)    Loss, Theft, Destruction of
Warrants.  Upon receipt of evidence satisfactory to the Issuer
of the ownership of and the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon receipt of
indemnity or security satisfactory to the Issuer or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Issuer will
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
number of shares of Common Stock.

       

      4.    Adjustment of Warrant Price
and Number of Shares Issuable Upon Exercise.  The Warrant Price
and the Warrant Share Number shall be subject to adjustment from time to time as
set forth in this Section 4.  The Issuer shall give the Holder notice
of any event described below which requires an adjustment pursuant to this
Section 4 in accordance with the notice provisions set forth in Section
5.

       

      (a)    Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or
Sale.

       

      (i)    In case
the Issuer after the Original Issue Date shall do any of the following (each, a
"Triggering Event"): (a) consolidate or merge with or into any other Person and
the Issuer shall not be the continuing or surviving corporation of such
consolidation or merger, or (b) permit any other Person to consolidate with or
merge into the Issuer and the Issuer shall be the continuing or surviving Person
but, in connection with such consolidation or merger, any Capital Stock of the
Issuer shall be changed into or exchanged for Securities of any other Person or
cash or any other property, or (c) transfer all or substantially all of its
properties or assets to any other Person, or (d) effect a capital reorganization
or reclassification of its Capital Stock, then, and in the case of each such
Triggering Event, proper provision shall be made to the Warrant Price and the
number of shares of Warrant Stock that may be purchased upon exercise of this
Warrant so that, upon the basis and the terms and in the manner provided in this
Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof
at any time after the consummation of such Triggering Event, to the extent this
Warrant is not exercised prior to such Triggering Event, to receive at the
Warrant Price as adjusted to take into account the consummation of such
Triggering Event, in lieu of the Common Stock issuable upon such exercise of
this Warrant prior to such Triggering Event, the Securities, to which such
Holder would have been entitled upon the consummation of such Triggering Event
if such Holder had exercised the rights represented by this Warrant immediately
prior thereto.  Immediately upon the occurrence of a Triggering Event,
the Issuer shall notify the Holder in writing of such Triggering Event and

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      provide
the calculations in determining the number of shares of Warrant Stock issuable
upon exercise of the new warrant and the adjusted Warrant Price.  Upon
the Holder’s request, the continuing or surviving corporation as a result of
such Triggering Event shall issue to the Holder a new warrant of like tenor
evidencing the right to purchase the adjusted number of shares of Warrant Stock
and the adjusted Warrant Price pursuant to the terms and provisions of this
Section 4(a)(i).  Notwithstanding the foregoing to the contrary, this
Section 4(a)(i) shall only apply if the surviving entity pursuant to any such
Triggering Event is a company that has a class of equity securities registered
pursuant to the Securities Exchange Act of 1934, as amended, and its common
stock is listed or quoted on a national securities exchange, national automated
quotation system or the OTC Bulletin Board.  In the event that the
surviving entity pursuant to any such Triggering Event is not a public company
that is registered pursuant to the Securities Exchange Act of 1934, as amended,
or its common stock is not listed or quoted on a national securities exchange,
national automated quotation system or the OTC Bulletin Board, then the Holder
shall have the right to demand that the Issuer pay to the Holder an amount in
cash equal to the value of this Warrant as of the date of the Triggering Event
calculated in accordance with the Black-Scholes formula.

       

      (ii)    In the
event that the Holder has elected not to exercise this Warrant prior to the
consummation of a Triggering Event, so long as the surviving entity pursuant to
any Triggering Event is a company that has a class of equity securities
registered pursuant to the Securities Exchange Act of 1934, as amended, and its
common stock is listed or quoted on a national securities exchange, national
automated quotation system or the OTC Bulletin Board, the surviving entity
and/or each Person (other than the Issuer) which may be required to deliver any
Securities, upon the exercise of this Warrant as provided herein shall assume,
by written instrument delivered to, and reasonably satisfactory to, the Holder
of this Warrant, (A) the obligations of the Issuer under this Warrant (and if
the Issuer shall survive the consummation of such Triggering Event, such
assumption shall be in addition to, and shall not release the Issuer from, any
continuing obligations of the Issuer under this Warrant) and (B) the obligation
to deliver to such Holder such Securities as, in accordance with the foregoing
provisions of this subsection (a), such Holder shall be entitled to receive, and
the surviving entity and/or each such Person shall have similarly delivered to
such Holder an opinion of counsel for the surviving entity and/or each such
Person, which counsel shall be reasonably satisfactory to such Holder, or in the
alternative, a written acknowledgement executed by the President or Chief
Financial Officer of the Issuer, stating that this Warrant shall thereafter
continue in full force and effect and the terms hereof (including, without
limitation, all of the provisions of this subsection (a)) shall be applicable to
the Securities, which the surviving entity and/or each such Person may be
required to deliver upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.

       

      (b)    Subdivisions and
Combinations.  If at any time the Issuer shall:

       

      (i)    subdivide
its outstanding shares of Common Stock into a larger number of shares of Common
Stock, or

       

      (ii)    combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      of the
same number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.

       

      (c)    Other Provisions applicable
to Adjustments under this Section.  The following provisions
shall be applicable to the making of adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect provided for in this Section 4:

       

      (i)    When Adjustments to Be
Made.  The adjustments required by this Section 4 shall be made
whenever and as often as any specified event requiring an adjustment shall
occur, except that any adjustment of the number of shares of Common Stock for
which this Warrant is exercisable that would otherwise be required may be
postponed (except in the case of a subdivision or combination of shares of the
Common Stock, as provided for in Section 4(b)) up to, but not beyond the date of
exercise if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than one percent (1%) of the shares of
Common Stock for which this Warrant is exercisable immediately prior to the
making of such adjustment.  Any adjustment representing a change of
less than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made(x) as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment or (y) on the date of exercise.  For the purpose
of any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.

       

      (ii)    Fractional
Interests.  In computing ad-justments under this Section 4,
fractional interests in Common Stock shall be taken into account to the near-est
one one-hundredth (1/100th) of a share.

       

      (d)    Form of Warrant after
Adjustments.  The form of this Warrant need not be changed
because of any adjustments in the Warrant Price or the number and kind of
Securities purchasable upon the exercise of this Warrant.

       

      5.    Notice of
Adjustments.  Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment.  Any dispute between the Issuer and
the Holder of this Warrant with respect to the matters set forth in such
certificate may at the option of the Holder of this Warrant be submitted to a
national or regional accounting firm reasonably acceptable to the Issuer and the
Holder, provided that the Issuer shall have ten (10) days after receipt of
notice from such Holder of its selection of such firm to object thereto, in
which case such Holder shall select another such firm and the Issuer shall have
no such right of objection.  The firm selected by the Holder of this
Warrant as provided in the preceding sentence shall be instructed to deliver a
written opinion as to such matters to the Issuer and such Holder within thirty
(30) days after submission to it of such dispute.  Such opinion shall
be final and binding on the parties hereto.  The costs and expenses of
the initial accounting firm shall be paid equally by the Issuer and the Holder
and, in the case of an objection by the Issuer, the costs and expenses of the
subsequent accounting firm shall be paid in full by the Issuer.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      6.    Fractional
Shares.  No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.

       

      7.    Ownership Cap and Exercise
Restriction.  Notwithstanding anything to the contrary set
forth in this Warrant, at no time may a Holder of this Warrant exercise this
Warrant if the number of shares of Common Stock to be issued pursuant to such
exercise would exceed, when aggregated with all other shares of Common Stock
owned by such Holder and its affiliates and its affiliates at such time, the
number of shares of Common Stock which would result in such Holder and its
affiliates beneficially owning (as determined in accordance with Section 13(d)
of the Exchange Act and the rules thereunder) in excess of 9.99% of the then
issued and outstanding shares of Common Stock; provided, however, that upon a
holder of this Warrant providing the Issuer with sixty-one (61) days notice
(pursuant to Section 13 hereof) (the "Waiver Notice") that such Holder would
like to waive this Section 7 with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 7 will be of no force or
effect with regard to all or a portion of the Warrant referenced in the Waiver
Notice; provided, further, that this provision shall be of no further force or
effect during the sixty-one (61) days immediately preceding the expiration of
the term of this Warrant.  Notwithstanding the foregoing, these
exercise restrictions shall not be applicable to Renaissance Capital Group,
Inc.  and its affiliates (collectively, "Renn"), if Renn so notifies
the Issuer (either in writing or by email) prior to the date of issuance of the
securities to which this paragraph is applicable.

       

      8.    Definitions.  For
the purposes of this Warrant, the following terms have the following
meanings:

       

       “Board" shall mean the
Board of Directors of the Issuer.

       

      "Capital Stock" means
and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.

       

      "Certificate of
Designation" means the Certificate of Designation of the Relative Rights
and Preferences of the Series D Convertible Preferred Stock of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      "Certificate of
Incorporation" means the Certificate of Incorporation of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.

       

      "Common Stock" means
the Common Stock, $0.01 par value per share, of the Issuer and any other Capital
Stock into which such stock may hereafter be changed.

       

      "Governmental
Authority" means any governmental, regulatory or self-regulatory entity,
department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.

       

      "Holders" mean the
Persons who shall from time to time own any Warrant.  The term
"Holder" means one of the Holders.

       

      "Independent
Appraiser" means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Issuer) that is regularly engaged in the business of appraising the
Capital Stock or assets of corporations or other entities as going concerns, and
which is not affiliated with either the Issuer or the Holder of any
Warrant.

       

      "Issuer" means BPO
Management Services, Inc., a Delaware corporation, and its
successors.

       

      "Majority Holders"
means at any time the Holders of Warrants exercisable for a majority of the
shares of Warrant Stock issuable under the then-outstanding
Warrants.

       

      "Original Issue Date"
means June 13, 2007.

       

      "OTC Bulletin Board"
means the over-the-counter electronic bulletin board.

       

      "Other Common" means
any other Capital Stock of the Issuer of any class which shall be authorized at
any time after the date of this Warrant (other than Common Stock) and which
shall have the right to participate in the distribution of earnings and assets
of the Issuer without limitation as to amount.

       

      “Outstanding Common
Stock” means, at any given time, the aggregate amount of outstanding
shares of Common Stock, assuming full exercise, conversion or exchange (as
applicable) of all options, warrants and other Securities which are convertible
into or exercisable or exchangeable for, and any right to subscribe for, shares
of Common Stock that are outstanding at such time.

       

      "Person" means an
individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      "Per Share Market
Value" means on any particular date (a) the last closing bid price per
share of the Common Stock on such date on the OTC Bulletin Board or a registered
national stock exchange on which the Common Stock is then listed, or if there is
no such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (b) if the Common
Stock is not quoted or listed then on the OTC Bulletin Board or any registered
national stock exchange, the last closing bid price for a share of Common Stock
in the over-the-counter market, as reported by the OTC Bulletin Board or in Pink
Sheets, LLC or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or Pink Sheets, LLC (or
similar organization or agency succeeding to its functions of reporting prices),
then the average of the "Pink Sheet" quotes for the applicable Trading Days
preceding such date of determination, or (d) if the Common Stock is not then
publicly traded the fair market value of a share of Common Stock as determined
by an Independent Appraiser selected in good faith by the Majority Holders;
provided, however, that the Issuer, after receipt of the determination by such
Independent Appraiser, shall have the right to select an additional Independent
Appraiser, in which case, the fair market value shall be equal to the average of
the determinations by each such Independent Appraiser; and provided, further
that all determinations of the Per Share Market Value shall be appropriately
adjusted for any stock dividends, stock splits or other similar transactions
during such period.  The determination of fair market value by an
Independent Appraiser shall be based upon the fair market value of the Issuer
determined on a going concern basis as between a willing buyer and a willing
seller and taking into account all relevant factors determinative of value, and
shall be final and binding on all parties.  In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.

       

      "Purchase Agreement"
means the Series D Convertible Preferred Stock Purchase Agreement dated as of
June 13, 2007, among the Issuer and the Purchasers.

       

      "Purchasers" means the
purchasers of the Series D Convertible Preferred Stock and the Warrants issued
by the Issuer pursuant to the Purchase Agreement.

       

      "Securities" means any
debt or equity securities of the Issuer, whether now or hereafter authorized,
any instrument convertible into or exchangeable for Securities or a Security,
and any option, warrant or other right to purchase or acquire any
Security.  "Security" means one of the Securities.

       

      "Securities Act" means
the Securities Act of 1933, as amended, or any similar federal statute then in
effect.

       

      "Subsidiary" means any
corporation at least 50% of whose outstanding Voting Stock shall at the time be
owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

       

      "Term" has the meaning
specified in Section 1 hereof.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      "Trading Day" means
(a) a day on which the Common Stock is quoted on the OTC Bulletin Board, or (b)
if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by Pink
Sheets, LLC (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall
mean any day except Saturday, Sunday and any day which shall be a legal holiday
or a day on which banking institutions in the State of New York are authorized
or required by law or other government action to close.

       

      "Voting Stock" means,
as applied to the Capital Stock of any corporation, Capital Stock of any class
or classes (however designated) having ordinary voting power for the election of
a majority of the members of the Board (or other governing body) of such
corporation, other than Capital Stock having such power only by reason of the
happening of a contingency.

       

      "Warrants" means the
Warrants issued and sold pursuant to the Purchase Agreement, including, without
limitation, this Warrant, and any other warrants of like tenor issued in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

       

      "Warrant Price"
initially means $1.25, as such price may be adjusted from time to time in
accordance with the adjustments specified in this Warrant, including Section 4
hereto.

       

      "Warrant Share Number"
means at any time the aggregate number of shares of Warrant Stock which may at
such time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made under
the terms hereof.

       

      "Warrant Stock" means
Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants.

       

      9.    Other
Notices.  In case at any time:

       

      
        	
                 
      

              	
                (A)

              	
                the
      Issuer shall make any distributions to the holders of Common Stock;
      or

              

      

       

      
        	
                 
      

              	
                (B)

              	
                the
      Issuer shall authorize the granting to all holders of its Common Stock of
      rights to subscribe for or purchase any shares of Capital Stock of any
      class or other rights; or

              

      

       

      
        	
                 
      

              	
                (C)

              	
                there
      shall be any reclassification of the Capital Stock of the Issuer;
      or

              

      

       

      
        	
                 
      

              	
                (D)

              	
                there
      shall be any capital reorganization by the Issuer;
  or

              

      

       

      
        	
                 
      

              	
                (E)

              	
                there
      shall be any (i) consolidation or merger involving the Issuer or (ii)
      sale, transfer or other disposition of all or substantially all of the
      Issuer's property, assets or business (except a merger or other
      reorganization in which the Issuer shall be the surviving corporation and
      its shares of Capital Stock shall continue to be outstanding and unchanged
      and except a consolidation, merger, sale, transfer or other disposition
      involving a wholly-owned Subsidiary);
or

              

      

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (F)

              	
                there
      shall be a voluntary or involuntary dissolution, liquidation or winding-up
      of the Issuer or any partial liquidation of the Issuer or distribution to
      holders of Common Stock;

              

      

       

      then, in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take
place.  Such notice also shall specify the date as of which the
holders of Common Stock of record shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
certificates for Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be.  Such
notice shall be given at least twenty (20) days prior to the action in question
and not less than ten (10) days prior to the record date or the date on which
the Issuer's transfer books are closed in respect thereto.  This
Warrant entitles the Holder to receive copies of all financial and other
information distributed or required to be distributed to the holders of the
Common Stock.

       

      10.    Amendment and
Waiver.  Any term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Issuer and the
Majority Holders; provided, however, that no such amendment or waiver shall
reduce the Warrant Share Number, increase the Warrant Price, shorten the period
during which this Warrant may be exercised or modify any provision of this
Section 10 without the consent of the Holder of this Warrant.  No
consideration shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of this Warrant unless the same
consideration is also offered to all holders of the Warrants.

       

      11.    Governing Law;
Jurisdiction.  This Warrant shall be governed by and construed
in accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction.  This
Warrant shall not be interpreted or construed with any presumption against the
party causing this Warrant to be drafted.  The Issuer and the Holder
agree that venue for any dispute arising under this Warrant will lie exclusively
in the state or federal courts located in New York County, New York, and the
parties irrevocably waive any right to raise forum non conveniens or any other
argument that New York is not the proper venue.  The Issuer and the
Holder irrevocably consent to personal jurisdiction in the state and federal
courts of the state of New York.  The Issuer and the Holder consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing in this Section 12
shall affect or limit any right to serve process in any other manner permitted
by law.  The Issuer and the Holder hereby agree that the prevailing
party in any suit, action or proceeding arising out of or relating to this
Warrant or the Purchase Agreement, shall be entitled to reimbursement for
reasonable legal fees from the non-prevailing party.  The parties
hereby waive all rights to a trial by jury.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      12.    Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by telecopy, e-mail or facsimile at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first
occur.  The addresses for such communications shall be:

       

      
        	If to the
      Issuer:	
                BPO
      Management Services, Inc.

                1290
      N.  Hancock, Ste 200

                Anaheim,
      CA 92807

                Attention:
      Chief Executive Officer

                Tel.  No.:
      (714) 974-2670

                Fax
      No.: (714) 974-4771

                E-mail:
      patrick.dolan@bpoms.com

              

      

       

      with
copies (which copies shall not constitute notice) to:

      
         

        
          	 	
                  
                    Bryan
      Cave LLP

                    3161
      Michelson Drive, Suite 1500

                    Irvine,
      CA 92612

                    Attention:
      Randolf W.  Katz, Esq.

                    Tel.  No.:
      (949) 223-7103

                    Fax
      No.: (949) 223-7100

                    E-mail:
      rwkatz@bryancavellp.com

                  

                
	 	 
	and	 
	 	
                  Cornman
      & Swartz

                  19800
      MacArthur Blvd., Suite 820

                  Irvine,
      CA 92612

                  Attention:
      Jack T.  Cornman, Esq.

                  Tel.  No.:
      (949) 224-1500

                  Fax
      No.: (949) 224-1505

                

        

         

      

      If to any
Holder: At the address of such Holder set forth on Exhibit A to the Purchase
Agreement or as specified in writing by such Holder with copies to:

       

      Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      13.    Warrant
Agent.  The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.

       

      14.    Remedies.  The
Issuer stipulates that the remedies at law of the Holder of this Warrant in the
event of any default or threatened default by the Issuer in the performance of
or compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

       

      15.    Successors and
Assigns.  This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors and assigns of the
Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.

       

      16.    Modification and
Severability.  If, in any action before any court or agency
legally empowered to enforce any provision contained herein, any provision
hereof is found to be unenforceable, then such provision shall be deemed
modified to the extent necessary to make it enforceable by such court or
agency.  If any such provision is not enforceable as set forth in the
preceding sentence, the unenforceability of such provision shall not affect the
other provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.

       

      17.    Headings.  The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.

       

       

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the Issuer has executed this Amended and Restated Series B
Warrant as of the day and year first above written.

       

       

      
        	 	
                BPO
      MANAGEMENT SERVICES, INC.

                 

                By:___________________________

                Name:

                Title:

              

      

       

       

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      EXERCISE
FORM

      SERIES
B WARRANT

       

      BPO
MANAGEMENT SERVICES, INC.

      

      The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Common Stock of BPO Management
Services, Inc.  covered by the within Warrant.

       

      Dated:
_________________

       

      
        	 	
                Signature  
      _________________________

                Address    
      _________________________

                _________________________

              

      

       

      Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: ______________

       

      The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.

       

      The
undersigned intends that payment of the Warrant Price shall be made as (check
one):

       

      Cash
Exercise_______

       

      Cashless
Exercise_______

       

      If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by
certified or official bank check (or via wire transfer) to the Issuer in
accordance with the terms of the Warrant.

       

      If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________.  The Issuer
shall pay a cash adjustment in respect of the fractional portion of the product
of the calculation set forth below in an amount equal to the product of the
fractional portion of such product and the Per Share Market Value on the date of
exercise, which product is ____________.

       

      X = Y -
(A)(Y)

      B

      

      Where:

       

      The
number of shares of Common Stock to be issued to the Holder
__________________(“X”).

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

       

      The
number of shares of Common Stock purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised ___________________________ (“Y”).

       

      The
Warrant Price ______________ (“A”).

       

      The Per
Share Market Value of one share of Common Stock _______________________
(“B”).

       

       

      ASSIGNMENT

      

      FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

       

      Dated:
_________________

      
         

        
          	 	
                  Signature  
      _________________________

                  Address    
      _________________________

                  _________________________

                

        

         

      

       

      PARTIAL
ASSIGNMENT

      

      FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.

       

      Dated:
_________________

       

      
        
          	 	
                  Signature  
      _________________________

                  Address    
      _________________________

                  _________________________

                

        

         

      

      

      FOR
USE BY THE ISSUER ONLY:

      

      This
Warrant No.  W-___ canceled (or transferred or exchanged) this _____
day of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No.  W-_____ issued for ____ shares of Common
Stock in the name of _______________.

       

       

      
 

    

    
      
         

      

      
        18 

        
          

        

      

      
         

      

    

    Exhibit
C

     

    
       

      THIS
AMENDED AND RESTATED WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN
OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

       

      AMENDED
AND RESTATED SERIES C WARRANT TO PURCHASE

      

      SHARES OF
COMMON STOCK

      

      OF

      

      BPO
MANAGEMENT SERVICES, INC.

      

      Expires
June 13, 2010

       

      
        	No.: W-C-07-
      __  	
                Number of Shares:
      ___________

              
	Date of Issuance:
      June 13, 2007 	 

      

       

      

      FOR VALUE
RECEIVED, the undersigned, BPO Management Services, Inc., a Delaware corporation
(together with its successors and assigns, the "Issuer"), hereby certifies that
_______________________________ or its registered assigns is entitled to
subscribe for and purchase, during the Term (as hereinafter defined), up to
____________________________________ (_____________) shares (subject to
adjustment as hereinafter provided) of the duly authorized, validly issued,
fully paid and non-assessable Common Stock of the Issuer, at an exercise price
per share equal to the Warrant Price then in effect, subject, however, to the
provisions and upon the terms and conditions hereinafter set
forth.  Capitalized terms used in this Warrant and not otherwise
defined herein shall have the respective meanings specified in Section 9
hereof.

       

      1.    Term.  The
term of this Warrant shall commence on June 13, 2007 and shall expire at 6:00
p.m., eastern time, on June 13, 2010 (such period being the
"Term").

       

      2.    Method of Exercise; Payment;
Issuance of New Warrant; Transfer and Exchange.

       

      (a)    Time of
Exercise.  The purchase rights represented by this Warrant may
be exercised in whole or in part during the Term for such number of shares of
Common Stock equal to fifty percent (50%) of the number of shares of Common
Stock issuable upon conversion of the shares of preferred stock of the Issuer
that have been exercised by the Holder pursuant to the Series J Warrant granted
by the Issuer to the Holder pursuant to the Purchase Agreement.

       

      
        
          
          

        

        
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      (b)    Method of
Exercise.  The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election (i) by certified or official bank
check or by wire transfer to an account designated by the Issuer, (ii) by
"cashless exercise" in accordance with the provisions of subsection (c) of this
Section 2, but only when a registration statement under the Securities Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

       

      (c)    Cashless
Exercise.  Notwithstanding any provisions herein to the
contrary and commencing one and a half (1.5) years following the Original Issue
Date if (i) the Per Share Market Value of one share of Common Stock is greater
than the Warrant Price (at the date of calculation as set forth below) and (ii)
a registration statement under the Securities Act providing for the resale of
the Warrant Stock is not then in effect by the date such registration statement
is required to be effective pursuant to the Registration Rights Agreement (as
defined in the Purchase Agreement) or not effective at any time during the
Effectiveness Period (as defined in the Registration Rights Agreement) in
accordance with the terms of the Registration Rights Agreement, unless the
registration statement is not effective as a result of the Issuer exercising its
rights under Section 3(n) of the Registration Rights Agreement, in lieu of
exercising this Warrant by payment of cash, the Holder may exercise this Warrant
by a cashless exercise and shall receive the number of shares of Common Stock
equal to an amount (as determined below) by surrender of this Warrant at the
principal office of the Issuer together with the properly endorsed Notice of
Exercise in which event the Issuer shall issue to the Holder a number of shares
of Common Stock computed using the following formula:

       

      X = Y -
(A)(Y)

                                       
B

       

      
        	
                 
      

              	
                Where

              	
                X
      =

              	
                the
      number of shares of Common Stock to be issued to the
    Holder.

              
	 	 	 	 
	 	 	
                Y
      =
 	
                the
      number of shares of Common Stock purchasable upon exercise of all of the
      Warrant or, if only a portion of the Warrant is being exercised, the
      portion of the Warrant being exercised. 

              
	 	 	 	 
	 	 	
                A
      = 

              	
                the
      Warrant Price. 

              
	 	 	 	 
	 	 	
                B
      = 

              	
                the
      Per Share Market Value of one share of Common
  Stock. 

              

      

       

      
      

      (d)    Issuance of Stock
Certificates.  In the event of any exercise of this Warrant in
accordance with and subject to the terms and conditions hereof, certificates for
the shares of Warrant Stock so purchased shall be dated the date of such
exercise and delivered to the Holder hereof within a reasonable time, not
exceeding three (3) Trading Days after such exercise (the “Delivery Date”) or,
at the request of the Holder (provided that a registration statement under the
Securities Act providing for the resale of the Warrant Stock is then in effect),
issued and delivered to the Depository Trust Company (“DTC”) account on the
Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”)
within a reasonable time, not exceeding three (3) Trading Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
holder of the shares of Warrant 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      Stock so
purchased as of the date of such exercise.  Notwithstanding the
foregoing to the contrary, the Issuer or its transfer agent shall only be
obligated to issue and deliver the shares to the DTC on a holder’s behalf via
DWAC if such exercise is in connection with a sale and the Issuer and its
transfer agent are participating in DTC through the DWAC system.  The
Holder shall deliver this original Warrant, or an indemnification undertaking
with respect to such Warrant in the case of its loss, theft or destruction, at
such time that this Warrant is fully exercised.  With respect to
partial exercises of this Warrant, the Issuer shall keep written records of the
number of shares of Warrant Stock exercised as of each date of
exercise.

       

      (e)    Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Issuer fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Stock pursuant to an exercise on or before the Delivery
Date, and if after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Stock which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Issuer shall (1)
pay in cash to the Holder the amount by which (x) the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased exceeds (y) the amount obtained by multiplying (A) the number of
shares of Warrant Stock that the Issuer was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant Stock for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the immediately
preceding sentence the Issuer shall be required to pay the Holder
$1,000.  The Holder shall provide the Issuer written notice indicating
the amounts payable to the Holder in respect of the Buy-In, together with
applicable confirmations and other evidence reasonably requested by the
Issuer.  Nothing herein shall limit a Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Issuer’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of this Warrant as required pursuant to the
terms hereof.

       

      (f)    Transferability of
Warrant.  Subject to Section 2(h) hereof, this Warrant may be
transferred by a Holder, in whole or in part, without the consent of the
Issuer.  If transferred pursuant to this paragraph, this Warrant may
be transferred on the books of the Issuer by the Holder hereof in person or by
duly authorized attorney, upon surrender of this Warrant at the principal office
of the Issuer, properly endorsed (by the Holder executing an assignment in the
form attached hereto) and upon payment of any necessary transfer tax or other
governmental charge imposed upon such transfer.  This Warrant is
exchangeable at the principal office of the Issuer for Warrants to purchase the
same aggregate number of shares of Warrant Stock, each new Warrant to represent
the right to purchase such number of shares of Warrant Stock as the Holder
hereof shall designate at the time of such exchange.  All Warrants
issued on transfers or exchanges shall be dated the Original Issue Date and
shall be identical with this Warrant except as to the number of shares of
Warrant Stock issuable pursuant thereto.

       

      
        
          
          

        

        
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      (g)    Continuing Rights of
Holder.  The Issuer will, at the time of or at any time after
each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing the extent, if any, of its continuing obligation to
afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.

       

      (h)    Compliance with Securities
Laws.

       

      (i)    The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and
the shares of Warrant Stock to be issued upon exercise hereof are being acquired
solely for the Holder's own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued upon
exercise hereof except pursuant to an effective registration statement, or an
exemption from registration, under the Securities Act and any applicable state
securities laws.

       

      (ii)    Except as
provided in paragraph (iii) below, this Warrant and all certificates
representing shares of Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following
form:

       

      THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

       

      (iii)   The
Issuer agrees to reissue this Warrant or certificates representing any of the
Warrant Stock, without the legend set forth above if at such time, prior to
making any transfer of any such securities, the Holder shall give written notice
to the Issuer describing the manner and terms of such transfer.  Such
proposed transfer will not be effected until: (a) either (i) the Issuer has
received an opinion of counsel reasonably satisfactory to the Issuer, to the
effect that the registration of such securities under the Securities Act is not
required in connection with such proposed transfer, (ii) a registration
statement under the Securities Act covering such proposed disposition has been
filed by the Issuer with the Securities and Exchange Commission and has become
effective under the Securities Act and the Holder has represented that the
Warrant Stock has been or will be sold, (iii) the Issuer has received other
evidence reasonably satisfactory to the Issuer that such registration and
qualification under the Securities Act and state securities laws are not
required, or (iv) the Holder provides the Issuer with reasonable assurances that
such security can be sold pursuant to Rule 144 under the Securities Act; and (b)
either (i) the Issuer has received an opinion of counsel reasonably satisfactory
to the Issuer, to the effect that registration or qualification under the
securities or "blue sky" laws of any state is not required in connection with
such proposed disposition, or (ii) compliance with applicable state securities
or "blue sky" laws has been effected or a valid exemption exists with respect
thereto.  The Issuer will 

       

      
        
          
          

        

        
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      respond
to any such notice from a holder within five (5) Trading Days.  In the
case of any proposed transfer under this Section 2(h), the Issuer will use
reasonable efforts to comply with any such applicable state securities or "blue
sky" laws, but shall in no event be required, (x) to qualify to do business in
any state where it is not then qualified, (y) to take any action that would
subject it to tax or to the general service of process in any state where it is
not then subject, or (z) to comply with state securities or “blue sky” laws of
any state for which registration by coordination is unavailable to the
Issuer.  The restrictions on transfer contained in this Section 2(h)
shall be in addition to, and not by way of limitation of, any other restrictions
on transfer contained in any other section of this Warrant.  Whenever
a certificate representing the Warrant Stock is required to be issued to a the
Holder without a legend, in lieu of delivering physical certificates
representing the Warrant Stock, the Issuer shall use its reasonable best efforts
to cause its transfer agent to electronically transmit the Warrant Stock to the
Holder by crediting the account of the Holder's Prime Broker with DTC through
its DWAC system (to the extent not inconsistent with any provisions of this
Warrant or the Purchase Agreement).  Notwithstanding the foregoing to
the contrary, the Issuer or its transfer agent shall only be obligated to issue
and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise
is in connection with a sale and the Issuer and its transfer agent are
participating in DTC through the DWAC system.

       

      (i)    Accredited Investor
Status.  In no event may the Holder exercise this Warrant in
whole or in part unless the Holder is then an “accredited investor” as defined
in Regulation D under the Securities Act.

       

      3.    Stock Fully Paid;
Reservation and Listing of Shares; Covenants.

       

      (a)    Stock Fully
Paid.  The Issuer represents, warrants, covenants and agrees
that all shares of Warrant Stock which may be issued upon the exercise of this
Warrant or otherwise hereunder will, when issued in accordance with the terms of
this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by or through the
Issuer.  The Issuer further covenants and agrees that during the
period within which this Warrant may be exercised, the Issuer will at all times
have authorized and reserved for the purpose of issuance upon exercise of this
Warrant a number of shares of Common Stock equal to at least one hundred twenty
percent (120%) of the aggregate number of shares of Common Stock issuable upon
exercise of this Warrant.

       

      (b)    Reservation.  If
any shares of Common Stock required to be reserved for issuance upon exercise of
this Warrant or as otherwise provided hereunder require registration or
qualification with any governmental authority under any federal or state law
before such shares may be so issued, the Issuer will in good faith use its best
efforts as expeditiously as possible at its expense to cause such shares to be
duly registered or qualified.  If the Issuer shall list any shares of
Common Stock on any securities exchange or market it will, at its expense, list
thereon, maintain and increase when necessary such listing, of, all shares of
Warrant Stock from time to time issued upon exercise of this Warrant or as
otherwise provided hereunder (provided that such Warrant Stock has been
registered pursuant to a registration statement under the Securities Act then in
effect), and, to the extent permissible under the applicable securities exchange
rules, all unissued shares of Warrant Stock which are at any time issuable
hereunder, so long as any shares of Common Stock shall be so
listed.  The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities which the Holder
of this Warrant shall be entitled to receive upon the exercise of this Warrant
if at the time any securities of the same class shall be listed on such
securities exchange or market by the Issuer.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

         

      

      (c)    Covenants.  The
Issuer shall not by any action including, without limitation, amending the
Certificate of Incorporation or the by-laws of the Issuer, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of the Holder
hereof against dilution (to the extent specifically provided herein) or
impairment.  Without limiting the generality of the foregoing, the
Issuer will (i) not permit the par value, if any, of its Common Stock to exceed
the then effective Warrant Price, (ii) not amend or modify any provision of the
Certificate of Incorporation or by-laws of the Issuer in any manner that would
adversely affect the rights of the Holders of the Warrants, (iii) take all such
action as may be reasonably necessary in order that the Issuer may validly and
legally issue fully paid and nonassessable shares of Common Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (iv) use its best
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this
Warrant.

       

      (d)    Loss, Theft, Destruction of
Warrants.  Upon receipt of evidence satisfactory to the Issuer
of the ownership of and the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon receipt of
indemnity or security satisfactory to the Issuer or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Issuer will
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
number of shares of Common Stock.

       

      4.    Adjustment of Warrant Price
and Number of Shares Issuable Upon Exercise.  The Warrant Price
and the Warrant Share Number shall be subject to adjustment from time to time as
set forth in this Section 4.  The Issuer shall give the Holder notice
of any event described below which requires an adjustment pursuant to this
Section 4 in accordance with the notice provisions set forth in Section
5.

       

      (a)    Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or
Sale.

       

      (i)    In case
the Issuer after the Original Issue Date shall do any of the following (each, a
"Triggering Event"): (a) consolidate or merge with or into any other Person and
the Issuer shall not be the continuing or surviving corporation of such
consolidation or merger, or (b) permit any other Person to consolidate with or
merge into the Issuer and the Issuer shall be the continuing or surviving Person
but, in connection with such consolidation or merger, any Capital Stock of the
Issuer shall be changed into or exchanged for Securities of any other Person or
cash or any other property, or (c) transfer all or substantially all of its
properties or assets to any other Person, or (d) effect a capital reorganization
or reclassification of its Capital Stock, then, and in the case of each such
Triggering Event, proper provision shall be made to the Warrant Price and the
number of shares of Warrant Stock that may be purchased upon exercise of this
Warrant so that, upon the basis and the terms and in the manner provided in this
Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof
at any time after the consummation of such Triggering Event, to the extent this
Warrant is not exercised prior to such Triggering Event, to receive at the
Warrant Price as adjusted to take into account the consummation of such
Triggering Event, in lieu of the Common Stock issuable upon such exercise of
this Warrant prior to such Triggering Event, the Securities to which such Holder
would have been entitled upon the consummation of such Triggering Event if such
Holder had exercised the rights represented by this Warrant immediately prior
thereto.  Immediately upon the occurrence of a Triggering Event, the
Issuer shall notify the Holder in writing of such Triggering Event and

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      provide
the calculations in determining the number of shares of Warrant Stock issuable
upon exercise of the new warrant and the adjusted Warrant Price.  Upon
the Holder’s request, the continuing or surviving corporation as a result of
such Triggering Event shall issue to the Holder a new warrant of like tenor
evidencing the right to purchase the adjusted number of shares of Warrant Stock
and the adjusted Warrant Price pursuant to the terms and provisions of this
Section 4(a)(i).  Notwithstanding the foregoing to the contrary, this
Section 4(a)(i) shall only apply if the surviving entity pursuant to any such
Triggering Event is a company that has a class of equity securities registered
pursuant to the Securities Exchange Act of 1934, as amended, and its common
stock is listed or quoted on a national securities exchange, national automated
quotation system or the OTC Bulletin Board.  In the event that the
surviving entity pursuant to any such Triggering Event is not a public company
that is registered pursuant to the Securities Exchange Act of 1934, as amended,
or its common stock is not listed or quoted on a national securities exchange,
national automated quotation system or the OTC Bulletin Board, then the Holder
shall have the right to demand that the Issuer pay to the Holder an amount in
cash equal to the value of this Warrant as of the date of the Triggering Event
calculated in accordance with the Black-Scholes formula.

       

      (ii)    In the
event that the Holder has elected not to exercise this Warrant prior to the
consummation of a Triggering Event, so long as the surviving entity pursuant to
any Triggering Event is a company that has a class of equity securities
registered pursuant to the Securities Exchange Act of 1934, as amended, and its
common stock is listed or quoted on a national securities exchange, national
automated quotation system or the OTC Bulletin Board, the surviving entity
and/or each Person (other than the Issuer) which may be required to deliver any
Securities upon the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the Holder of
this Warrant, (A) the obligations of the Issuer under this Warrant (and if the
Issuer shall survive the consummation of such Triggering Event, such assumption
shall be in addition to, and shall not release the Issuer from, any continuing
obligations of the Issuer under this Warrant) and (B) the obligation to deliver
to such Holder such Securities as, in accordance with the foregoing provisions
of this subsection (a), such Holder shall be entitled to receive, and the
surviving entity and/or each such Person shall have similarly delivered to such
Holder an opinion of counsel for the surviving entity and/or each such Person,
which counsel shall be reasonably satisfactory to such Holder, or in the
alternative, a written acknowledgement executed by the President or Chief
Financial Officer of the Issuer, stating that this Warrant shall thereafter
continue in full force and effect and the terms hereof (including, without
limitation, all of the provisions of this subsection (a)) shall be applicable to
the Securities which the surviving entity and/or each such Person may be
required to deliver upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.

       

      (b)    Subdivisions and
Combinations.  If at any time the Issuer shall:

       

      (i)    subdivide
its outstanding shares of Common Stock into a larger number of shares of Common
Stock, or

       

      (ii)    combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.

       

      (c)    Other Provisions applicable
to Adjustments under this Section.  The following provisions
shall be applicable to the making of adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect provided for in this Section 4:

       

      
        
          
          

        

        
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      (i)    When Adjustments to Be
Made.  The adjustments required by this Section 4 shall be made
whenever and as often as any specified event requiring an adjustment shall
occur, except that any adjustment of the number of shares of Common Stock for
which this Warrant is exercisable that would otherwise be required may be
postponed (except in the case of a subdivision or combination of shares of the
Common Stock, as provided for in Section 4(b)) up to, but not beyond the date of
exercise if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than one percent (1%) of the shares of
Common Stock for which this Warrant is exercisable immediately prior to the
making of such adjustment.  Any adjustment representing a change of
less than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made(x) as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment or (y) on the date of exercise.  For the purpose
of any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.

       

      (ii)    Fractional
Interests.  In computing ad-justments under this Section 4,
fractional interests in Common Stock shall be taken into account to the near-est
one one-hundredth (1/100th) of a share.

       

      (d)    Form of Warrant after
Adjustments.  The form of this Warrant need not be changed
because of any adjustments in the Warrant Price or the number and kind of
Securities purchasable upon the exercise of this Warrant.

       

      5.    Notice of
Adjustments.  Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment.  Any dispute between the Issuer and
the Holder of this Warrant with respect to the matters set forth in such
certificate may at the option of the Holder of this Warrant be submitted to a
national or regional accounting firm reasonably acceptable to the Issuer and the
Holder, provided that the Issuer shall have ten (10) days after receipt of
notice from such Holder of its selection of such firm to object thereto, in
which case such Holder shall select another such firm and the Issuer shall have
no such right of objection.  The firm selected by the Holder of this
Warrant as provided in the preceding sentence shall be instructed to deliver a
written opinion as to such matters to the Issuer and such Holder within thirty
(30) days after submission to it of such dispute.  Such opinion shall
be final and binding on the parties hereto.  The costs and expenses of
the initial accounting firm shall be paid equally by the Issuer and the Holder
and, in the case of an objection by the Issuer, the costs and expenses of the
subsequent accounting firm shall be paid in full by the Issuer.

       

      6.    Fractional
Shares.  No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.

       

      
        
          
          

        

        
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      7.    Ownership Cap and Exercise
Restriction.  Notwithstanding anything to the contrary set
forth in this Warrant, at no time may a Holder of this Warrant exercise this
Warrant if the number of shares of Common Stock to be issued pursuant to such
exercise would exceed, when aggregated with all other shares of Common Stock
owned by such Holder and its affiliates at such time, the number of shares of
Common Stock which would result in such Holder and its affiliates beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act and
the rules thereunder) in excess of 9.99% of the then issued and outstanding
shares of Common Stock; provided, however, that upon a holder of this Warrant
providing the Issuer with sixty-one (61) days notice (pursuant to Section 13
hereof) (the "Waiver Notice") that such Holder would like to waive this Section
7 with regard to any or all shares of Common Stock issuable upon exercise of
this Warrant, this Section 7 will be of no force or effect with regard to all or
a portion of the Warrant referenced in the Waiver Notice; provided, further,
that this provision shall be of no further force or effect during the sixty-one
(61) days immediately preceding the expiration of the term of this
Warrant.  Notwithstanding the foregoing, these exercise restrictions
shall not be applicable to Renaissance Capital Group, Inc.  and its
affiliates (collectively, "Renn"), if Renn so notifies the Issuer (either in
writing or by email) prior to the date of issuance of the securities to which
this paragraph is applicable.

       

      8.    Definitions.  For
the purposes of this Warrant, the following terms have the following
meanings:

       

      “Board" shall mean the
Board of Directors of the Issuer.

       

      "Capital Stock" means
and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.

       

      "Certificate of
Designation" means the Certificate of Designation of the Relative Rights
and Preferences of the Series D Convertible Preferred Stock of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.

       

      "Certificate of
Incorporation" means the Certificate of Incorporation of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.

       

      "Common Stock" means
the Common Stock, $0.01 par value per share, of the Issuer and any other Capital
Stock into which such stock may hereafter be changed.

       

      "Governmental
Authority" means any governmental, regulatory or self-regulatory entity,
department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.

       

      "Holders" mean the
Persons who shall from time to time own any Warrant.  The term
"Holder" means one of the Holders.

       

      "Independent
Appraiser" means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Issuer) that is regularly engaged in the business of appraising the
Capital Stock or assets of corporations or other entities as going concerns, and
which is not affiliated with either the Issuer or the Holder of any
Warrant.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

         

      

      "Issuer" means BPO
Management Services, Inc., a Delaware corporation, and its
successors.

       

      "Majority Holders"
means at any time the Holders of Warrants exercisable for a majority of the
shares of Warrant Stock issuable under the then-outstanding
Warrants.

       

      "Original Issue Date"
means June 13, 2007.

       

      "OTC Bulletin Board"
means the over-the-counter electronic bulletin board.

       

      "Other Common" means
any other Capital Stock of the Issuer of any class which shall be authorized at
any time after the date of this Warrant (other than Common Stock) and which
shall have the right to participate in the distribution of earnings and assets
of the Issuer without limitation as to amount.

       

      “Outstanding Common
Stock” means, at any given time, the aggregate amount of outstanding
shares of Common Stock, assuming full exercise, conversion or exchange (as
applicable) of all options, warrants and other Securities which are convertible
into or exercisable or exchangeable for, and any right to subscribe for, shares
of Common Stock that are outstanding at such time.

       

      "Person" means an
individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.

       

      "Per Share Market
Value" means on any particular date (a) the last closing bid price per
share of the Common Stock on such date on the OTC Bulletin Board or a registered
national stock exchange on which the Common Stock is then listed, or if there is
no such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (b) if the Common
Stock is not quoted or listed then on the OTC Bulletin Board or any registered
national stock exchange, the last closing bid price for a share of Common Stock
in the over-the-counter market, as reported by the OTC Bulletin Board or in Pink
Sheets, LLC or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or Pink Sheets, LLC (or
similar organization or agency succeeding to its functions of reporting prices),
then the average of the "Pink Sheet" quotes for the applicable Trading Days
preceding such date of determination, or (d) if the Common Stock is not then
publicly traded the fair market value of a share of Common Stock as determined
by an Independent Appraiser selected in good faith by the Majority Holders;
provided, however, that the Issuer, after receipt of the determination by such
Independent Appraiser, shall have the right to select an additional Independent
Appraiser, in which case, the fair market value shall be equal to the average of
the determinations by each such Independent Appraiser; and provided, further
that all determinations of the Per Share Market Value shall be appropriately
adjusted for any stock dividends, stock splits or other similar transactions
during such period.  The determination of fair market value by an
Independent Appraiser shall be based upon the fair market value of the Issuer
determined on a going concern basis as between a willing buyer and a willing
seller and taking into account all relevant factors determinative of value, and
shall be final and binding on all parties.  In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

         

      

      "Purchase Agreement"
means the Series D Convertible Preferred Stock Purchase Agreement dated as of
June 13, 2007, among the Issuer and the Purchasers.

       

      "Purchasers" means the
purchasers of the Series D Convertible Preferred Stock and the Warrants issued
by the Issuer pursuant to the Purchase Agreement.

       

      "Securities" means any
debt or equity securities of the Issuer, whether now or hereafter authorized,
any instrument convertible into or exchangeable for Securities or a Security,
and any option, warrant or other right to purchase or acquire any
Security.  "Security" means one of the Securities.

       

      "Securities Act" means
the Securities Act of 1933, as amended, or any similar federal statute then in
effect.

       

      "Subsidiary" means any
corporation at least 50% of whose outstanding Voting Stock shall at the time be
owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

       

      "Term" has the meaning
specified in Section 1 hereof.

       

      "Trading Day" means
(a) a day on which the Common Stock is quoted on the OTC Bulletin Board, or (b)
if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by Pink
Sheets, LLC (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall
mean any day except Saturday, Sunday and any day which shall be a legal holiday
or a day on which banking institutions in the State of New York are authorized
or required by law or other government action to close.

       

      "Voting Stock" means,
as applied to the Capital Stock of any corporation, Capital Stock of any class
or classes (however designated) having ordinary voting power for the election of
a majority of the members of the Board (or other governing body) of such
corporation, other than Capital Stock having such power only by reason of the
happening of a contingency.

       

      "Warrants" means the
Warrants issued and sold pursuant to the Purchase Agreement, including, without
limitation, this Warrant, and any other warrants of like tenor issued in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

       

      "Warrant Price"
initially means $1.35, as such price may be adjusted from time to time in
accordance with the adjustments specified in this Warrant, including Section 4
hereto.

       

      "Warrant Share Number"
means at any time the aggregate number of shares of Warrant Stock which may at
such time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made under
the terms hereof.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

         

      

      "Warrant Stock" means
Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants.

       

      9.    Other
Notices.  In case at any time:

       

      
        	
                 
      

              	
                (A)

              	
                the
      Issuer shall make any distributions to the holders of Common Stock;
      or

              

      

       

      
        	
                 
      

              	
                (B)

              	
                the
      Issuer shall authorize the granting to all holders of its Common Stock of
      rights to subscribe for or purchase any shares of Capital Stock of any
      class or other rights; or

              

      

       

      
        	
                 
      

              	
                (C)

              	
                there
      shall be any reclassification of the Capital Stock of the Issuer;
      or

              

      

       

      
        	
                 
      

              	
                (D)

              	
                there
      shall be any capital reorganization by the Issuer;
  or

              

      

       

      
        	
                 
      

              	
                (E)

              	
                there
      shall be any (i) consolidation or merger involving the Issuer or (ii)
      sale, transfer or other disposition of all or substantially all of the
      Issuer's property, assets or business (except a merger or other
      reorganization in which the Issuer shall be the surviving corporation and
      its shares of Capital Stock shall continue to be outstanding and unchanged
      and except a consolidation, merger, sale, transfer or other disposition
      involving a wholly-owned Subsidiary);
or

              

      

       

      
        	
                 
      

              	
                (F)

              	
                there
      shall be a voluntary or involuntary dissolution, liquidation or winding-up
      of the Issuer or any partial liquidation of the Issuer or distribution to
      holders of Common Stock;

              

      

       

      then, in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take
place.  Such notice also shall specify the date as of which the
holders of Common Stock of record shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
certificates for Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be.  Such
notice shall be given at least twenty (20) days prior to the action in question
and not less than ten (10) days prior to the record date or the date on which
the Issuer's transfer books are closed in respect thereto.  This
Warrant entitles the Holder to receive copies of all financial and other
information distributed or required to be distributed to the holders of the
Common Stock.

       

      10.   Amendment and
Waiver.  Any term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Issuer and the
Majority Holders; provided, however, that no such amendment or waiver shall
reduce the Warrant Share Number, increase the Warrant Price, shorten the period
during which this Warrant may be exercised or modify any provision of this
Section 10 without the consent of the Holder of this Warrant.  No
consideration shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of this Warrant unless the same
consideration is also offered to all holders of the Warrants.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

         

      

      11.   Governing Law;
Jurisdiction.  This Warrant shall be governed by and construed
in accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction.  This
Warrant shall not be interpreted or construed with any presumption against the
party causing this Warrant to be drafted.  The Issuer and the Holder
agree that venue for any dispute arising under this Warrant will lie exclusively
in the state or federal courts located in New York County, New York, and the
parties irrevocably waive any right to raise forum non conveniens or any other
argument that New York is not the proper venue.  The Issuer and the
Holder irrevocably consent to personal jurisdiction in the state and federal
courts of the state of New York.  The Issuer and the Holder consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing in this Section 12
shall affect or limit any right to serve process in any other manner permitted
by law.  The Issuer and the Holder hereby agree that the prevailing
party in any suit, action or proceeding arising out of or relating to this
Warrant or the Purchase Agreement, shall be entitled to reimbursement for
reasonable legal fees from the non-prevailing party.  The parties
hereby waive all rights to a trial by jury.

       

      12.   Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by telecopy, e-mail or facsimile at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first
occur.  The addresses for such communications shall be:

       

      If to the
Issuer:

      BPO
Management Services, Inc.

      1290
N.  Hancock, Ste 200

      Anaheim,
CA 92807

      Attention:
Chief Executive Officer

      Tel.  No.:
(714) 974-2670

      Fax No.:
(714) 974-4771

      E-mail:
patrick.dolan@bpoms.com

      

      with
copies (which copies shall not constitute notice) to:

      

      Bryan
Cave LLP

      3161
Michelson Drive, Suite 1500

      Irvine,
CA 92612

      Attention:
Randolf W.  Katz, Esq.

      Tel.  No.:
(949) 223-7103

      Fax No.:
(949) 223-7100

      E-mail:
rwkatz@bryancavellp.com

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

         

      

      and

      Cornman
& Swartz

      19800
MacArthur Blvd., Suite 820

      Irvine,
CA 92612

      Attention:
Jack T.  Cornman, Esq.

      Tel.  No.:
(949) 224-1500

      Fax No.:
(949) 224-1505

      

      If to any
Holder: At the address of such Holder set forth on Exhibit A to the Purchase
Agreement or as specified in writing by such Holder with copies to:

       

      Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.

       

      13.    Warrant
Agent.  The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.

       

      14.    Remedies.  The
Issuer stipulates that the remedies at law of the Holder of this Warrant in the
event of any default or threatened default by the Issuer in the performance of
or compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

       

      15.    Successors and
Assigns.  This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors and assigns of the
Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.

       

      16.    Modification and
Severability.  If, in any action before any court or agency
legally empowered to enforce any provision contained herein, any provision
hereof is found to be unenforceable, then such provision shall be deemed
modified to the extent necessary to make it enforceable by such court or
agency.  If any such provision is not enforceable as set forth in the
preceding sentence, the unenforceability of such provision shall not affect the
other provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.

       

      17.    Headings.  The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.

       

       

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      IN
WITNESS WHEREOF, the Issuer has executed this Amended and Restated Series A
Warrant as of the day and year first above written.

       

      
      

       

      
        	 	
                BPO
      MANAGEMENT SERVICES, INC.

                

                By:     
      ____________________________

                Name:

                Title: 

              

      

       

       

      
 

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      
EXERCISE
FORM

      SERIES
C WARRANT

      

      BPO
MANAGEMENT SERVICES, INC.

      

      The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Common Stock of BPO Management
Services, Inc.  covered by the within Warrant.

       

      Dated:
_________________

      
      

       

      
        	 	
                Signature   ______________________________________________     

                Address     ________________________________________

                               ________________________________________

              

      

       

      Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: _________________________

       

      The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.

       

      The
undersigned intends that payment of the Warrant Price shall be made as (check
one):

       

      Cash
Exercise_______

       

      Cashless
Exercise_______

       

      If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by
certified or official bank check (or via wire transfer) to the Issuer in
accordance with the terms of the Warrant.

       

      If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________.  The Issuer
shall pay a cash adjustment in respect of the fractional portion of the product
of the calculation set forth below in an amount equal to the product of the
fractional portion of such product and the Per Share Market Value on the date of
exercise, which product is ____________.

       

      X = Y -
(A)(Y)

                       
B

      

      Where:

       

      The
number of shares of Common Stock to be issued to the Holder
__________________(“X”).

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      The
number of shares of Common Stock purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised ___________________________ (“Y”).

       

      The
Warrant Price ______________ (“A”).

       

      The Per
Share Market Value of one share of Common Stock _______________________
(“B”).

       

      ASSIGNMENT

      

      FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

       

      
        Dated:
_________________

        
        

         

        
          
            	 	
                    Signature   ______________________________________________     

                    Address     ________________________________________

                                   ________________________________________

                  

          

        

      

       

      PARTIAL
ASSIGNMENT

      

      FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.

       

      
        Dated:
_________________

        
           

          
            	 	
                    Signature   ______________________________________________     

                    Address     ________________________________________

                                   ________________________________________

                  

          

           

        

      

      FOR
USE BY THE ISSUER ONLY:

      

      This
Warrant No.  W-___ canceled (or transferred or exchanged) this _____
day of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No.  W-_____ issued for ____ shares of Common
Stock in the name of _______________.

       

       

       

    

    
      
         

      

      
        17 

        
          

        

      

      
         

      

    

    Exhibit
D

     

     

    
       

       

      THIS
AMENDED AND RESTATED WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN
OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

       

      AMENDED
AND RESTATED SERIES D WARRANT TO PURCHASE

      

      SHARES OF
COMMON STOCK

      

      OF

      

      BPO
MANAGEMENT SERVICES, INC.

      

      Expires
June 13, 2012

       

      
        	No.: W-D-07-
      __  	
                Number of Shares:
      1,041,667

              
	Date of Issuance:
      June 13, 2007 	 

      

       

      FOR VALUE
RECEIVED, the undersigned, BPO Management Services, Inc., a Delaware corporation
(together with its successors and assigns, the "Issuer"), hereby certifies that
US Special Opportunities Trust PLC or its registered assigns is entitled to
subscribe for and purchase, during the Term (as hereinafter defined), up to One
Million Forty-One Thousand Six Hundred Sixty-Seven (1,041,667) shares (subject
to adjustment as hereinafter provided) of the duly authorized, validly issued,
fully paid and non-assessable Common Stock of the Issuer, at an exercise price
per share equal to the Warrant Price then in effect, subject, however, to the
provisions and upon the terms and conditions hereinafter set
forth.  Capitalized terms used in this Warrant and not otherwise
defined herein shall have the respective meanings specified in Section 9
hereof.

       

      1.    Term.  The
term of this Warrant shall commence on June 13, 2007 and shall expire at 6:00
p.m., eastern time, on June 13, 2012 (such period being the
"Term").

       

      2.    Method of Exercise; Payment;
Issuance of New Warrant; Transfer and Exchange.

       

      (a)    Time of
Exercise.  The purchase rights represented by this Warrant may
be exercised in whole or in part during the Term for such number of shares of
Common Stock equal to one hundred percent (100%) of the number of shares of
Common Stock issuable upon conversion of the shares of preferred stock of the
Issuer that have been exercised by the Holder pursuant to the Series J Warrant
granted by the Issuer to the Holder pursuant to the Purchase
Agreement.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      (b)    Method of
Exercise.  The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election (i) by certified or official bank
check or by wire transfer to an account designated by the Issuer, (ii) by
"cashless exercise" in accordance with the provisions of subsection (c) of this
Section 2, but only when a registration statement under the Securities Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

       

      (c)    Cashless
Exercise.  Notwithstanding any provisions herein to the
contrary and commencing one and a half (1.5) years following the Original Issue
Date if (i) the Per Share Market Value of one share of Common Stock is greater
than the Warrant Price (at the date of calculation as set forth below) and (ii)
a registration statement under the Securities Act providing for the resale of
the Warrant Stock is not then in effect by the date such registration statement
is required to be effective pursuant to the Registration Rights Agreement (as
defined in the Purchase Agreement) or not effective at any time during the
Effectiveness Period (as defined in the Registration Rights Agreement) in
accordance with the terms of the Registration Rights Agreement, unless the
registration statement is not effective as a result of the Issuer exercising its
rights under Section 3(n) of the Registration Rights Agreement, in lieu of
exercising this Warrant by payment of cash, the Holder may exercise this Warrant
by a cashless exercise and shall receive the number of shares of Common Stock
equal to an amount (as determined below) by surrender of this Warrant at the
principal office of the Issuer together with the properly endorsed Notice of
Exercise in which event the Issuer shall issue to the Holder a number of shares
of Common Stock computed using the following formula:

       

      X = Y -
(A)(Y)

                                      
B

       

      
        	
                 
      

              	
                Where

              	
                X
      =

              	
                the
      number of shares of Common Stock to be issued to the
    Holder.

              
	 	 	 	 
	 	 	
                Y
      =
 	
                the
      number of shares of Common Stock purchasable upon exercise of all of the
      Warrant or, if only a portion of the Warrant is being exercised, the
      portion of the Warrant being exercised. 

              
	 	 	 	 
	 	 	
                A
      = 

              	
                the
      Warrant Price. 

              
	 	 	 	 
	 	 	
                B
      = 

              	
                the
      Per Share Market Value of one share of Common
  Stock. 

              

      

       

      
      

      
      

      (d)    Issuance of Stock
Certificates.  In the event of any exercise of this Warrant in
accordance with and subject to the terms and conditions hereof, certificates for
the shares of Warrant Stock so purchased shall be dated the date of such
exercise and delivered to the Holder hereof within a reasonable time, not
exceeding three (3) Trading Days after such exercise (the “Delivery Date”) or,
at the request of the Holder (provided that a registration statement under the
Securities Act providing for the resale of the Warrant Stock is then in effect),
issued and delivered to the Depository Trust Company (“DTC”) account on the
Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”)
within a reasonable time, not exceeding three (3) Trading Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
holder of the shares of Warrant 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      Stock so
purchased as of the date of such exercise.  Notwithstanding the
foregoing to the contrary, the Issuer or its transfer agent shall only be
obligated to issue and deliver the shares to the DTC on a holder’s behalf via
DWAC if such exercise is in connection with a sale and the Issuer and its
transfer agent are participating in DTC through the DWAC system.  The
Holder shall deliver this original Warrant, or an indemnification undertaking
with respect to such Warrant in the case of its loss, theft or destruction, at
such time that this Warrant is fully exercised.  With respect to
partial exercises of this Warrant, the Issuer shall keep written records of the
number of shares of Warrant Stock exercised as of each date of
exercise.

       

      (e)    Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Issuer fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Stock pursuant to an exercise on or before the Delivery
Date, and if after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Stock which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Issuer shall (1)
pay in cash to the Holder the amount by which (x) the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased exceeds (y) the amount obtained by multiplying (A) the number of
shares of Warrant Stock that the Issuer was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant Stock for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the immediately
preceding sentence the Issuer shall be required to pay the Holder
$1,000.  The Holder shall provide the Issuer written notice indicating
the amounts payable to the Holder in respect of the Buy-In, together with
applicable confirmations and other evidence reasonably requested by the
Issuer.  Nothing herein shall limit a Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Issuer’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of this Warrant as required pursuant to the
terms hereof.

       

      (f)    Transferability of
Warrant.  Subject to Section 2(h) hereof, this Warrant may be
transferred by a Holder, in whole or in part, without the consent of the
Issuer.  If transferred pursuant to this paragraph, this Warrant may
be transferred on the books of the Issuer by the Holder hereof in person or by
duly authorized attorney, upon surrender of this Warrant at the principal office
of the Issuer, properly endorsed (by the Holder executing an assignment in the
form attached hereto) and upon payment of any necessary transfer tax or other
governmental charge imposed upon such transfer.  This Warrant is
exchangeable at the principal office of the Issuer for Warrants to purchase the
same aggregate number of shares of Warrant Stock, each new Warrant to represent
the right to purchase such number of shares of Warrant Stock as the Holder
hereof shall designate at the time of such exchange.  All Warrants
issued on transfers or exchanges shall be dated the Original Issue Date and
shall be identical with this Warrant except as to the number of shares of
Warrant Stock issuable pursuant thereto.

       

      
        
          
          

        

        
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      (g)    Continuing Rights of
Holder.  The Issuer will, at the time of or at any time after
each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing the extent, if any, of its continuing obligation to
afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.

       

      (h)    Compliance with Securities
Laws.

       

      (i)    The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and
the shares of Warrant Stock to be issued upon exercise hereof are being acquired
solely for the Holder's own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued upon
exercise hereof except pursuant to an effective registration statement, or an
exemption from registration, under the Securities Act and any applicable state
securities laws.

       

      (ii)    Except as
provided in paragraph (iii) below, this Warrant and all certificates
representing shares of Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following
form:

       

      THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

       

      (iii)   The
Issuer agrees to reissue this Warrant or certificates representing any of the
Warrant Stock, without the legend set forth above if at such time, prior to
making any transfer of any such securities, the Holder shall give written notice
to the Issuer describing the manner and terms of such transfer.  Such
proposed transfer will not be effected until: (a) either (i) the Issuer has
received an opinion of counsel reasonably satisfactory to the Issuer, to the
effect that the registration of such securities under the Securities Act is not
required in connection with such proposed transfer, (ii) a registration
statement under the Securities Act covering such proposed disposition has been
filed by the Issuer with the Securities and Exchange Commission and has become
effective under the Securities Act and the Holder has represented that the
Warrant Stock has been or will be sold, (iii) the Issuer has received other
evidence reasonably satisfactory to the Issuer that such registration and
qualification under the Securities Act and state securities laws are not
required, or (iv) the Holder provides the Issuer with reasonable assurances that
such security can be sold pursuant to Rule 144 under the Securities Act; and (b)
either (i) the Issuer has received an opinion of counsel reasonably satisfactory
to the Issuer, to the effect that registration or qualification under the
securities or "blue sky" laws of any state is not required in connection with
such proposed disposition, or (ii) compliance with applicable state securities
or "blue sky" laws has been effected or a valid exemption exists with respect
thereto.  The Issuer will 

       

      
        
          
          

        

        
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      respond
to any such notice from a holder within five (5) Trading Days.  In the
case of any proposed transfer under this Section 2(h), the Issuer will use
reasonable efforts to comply with any such applicable state securities or "blue
sky" laws, but shall in no event be required, (x) to qualify to do business in
any state where it is not then qualified, (y) to take any action that would
subject it to tax or to the general service of process in any state where it is
not then subject, or (z) to comply with state securities or “blue sky” laws of
any state for which registration by coordination is unavailable to the
Issuer.  The restrictions on transfer contained in this Section 2(h)
shall be in addition to, and not by way of limitation of, any other restrictions
on transfer contained in any other section of this Warrant.  Whenever
a certificate representing the Warrant Stock is required to be issued to a the
Holder without a legend, in lieu of delivering physical certificates
representing the Warrant Stock, the Issuer shall use its reasonable best efforts
to cause its transfer agent to electronically transmit the Warrant Stock to the
Holder by crediting the account of the Holder's Prime Broker with DTC through
its DWAC system (to the extent not inconsistent with any provisions of this
Warrant or the Purchase Agreement).  Notwithstanding the foregoing to
the contrary, the Issuer or its transfer agent shall only be obligated to issue
and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise
is in connection with a sale and the Issuer and its transfer agent are
participating in DTC through the DWAC system.

       

      (i)    Accredited Investor
Status.  In no event may the Holder exercise this Warrant in
whole or in part unless the Holder is then an “accredited investor” as defined
in Regulation D under the Securities Act.

       

      3.    Stock Fully Paid;
Reservation and Listing of Shares; Covenants.

       

      (a)    Stock Fully
Paid.  The Issuer represents, warrants, covenants and agrees
that all shares of Warrant Stock which may be issued upon the exercise of this
Warrant or otherwise hereunder will, when issued in accordance with the terms of
this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by or through the
Issuer.  The Issuer further covenants and agrees that during the
period within which this Warrant may be exercised, the Issuer will at all times
have authorized and reserved for the purpose of issuance upon exercise of this
Warrant a number of shares of Common Stock equal to at least one hundred twenty
percent (120%) of the aggregate number of shares of Common Stock issuable upon
exercise of this Warrant.

       

      (b)    Reservation.  If
any shares of Common Stock required to be reserved for issuance upon exercise of
this Warrant or as otherwise provided hereunder require registration or
qualification with any governmental authority under any federal or state law
before such shares may be so issued, the Issuer will in good faith use its best
efforts as expeditiously as possible at its expense to cause such shares to be
duly registered or qualified.  If the Issuer shall list any shares of
Common Stock on any securities exchange or market it will, at its expense, list
thereon, maintain and increase when necessary such listing, of, all shares of
Warrant Stock from time to time issued upon exercise of this Warrant or as
otherwise provided hereunder (provided that such Warrant Stock has been
registered pursuant to a registration statement under the Securities Act then in
effect), and, to the extent permissible under the applicable securities exchange
rules, all unissued shares of Warrant Stock which are at any time issuable
hereunder, so long as any shares of Common Stock shall be so
listed.  The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities which the Holder
of this Warrant shall be entitled to receive upon the exercise of this Warrant
if at the time any securities of the same class shall be listed on such
securities exchange or market by the Issuer.

       

      (c)    Loss, Theft, Destruction of
Warrants.  Upon receipt of evidence satisfactory to the Issuer
of the ownership of and the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon receipt of
indemnity or security satisfactory to the Issuer or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Issuer will
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
number of shares of Common Stock.

       

      
        
          
          

        

        
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      4.    Adjustment of Warrant Price
and Number of Shares Issuable Upon Exercise.  The Warrant Price
and the Warrant Share Number shall be subject to adjustment from time to time as
set forth in this Section 4.  The Issuer shall give the Holder notice
of any event described below which requires an adjustment pursuant to this
Section 4 in accordance with the notice provisions set forth in Section
5.

       

      (a)    Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or
Sale.

       

      (i)    In case
the Issuer after the Original Issue Date shall do any of the following (each, a
"Triggering Event"): (a) consolidate or merge with or into any other Person and
the Issuer shall not be the continuing or surviving corporation of such
consolidation or merger, or (b) permit any other Person to consolidate with or
merge into the Issuer and the Issuer shall be the continuing or surviving Person
but, in connection with such consolidation or merger, any Capital Stock of the
Issuer shall be changed into or exchanged for Securities of any other Person or
cash or any other property, or (c) transfer all or substantially all of its
properties or assets to any other Person, or (d) effect a capital reorganization
or reclassification of its Capital Stock, then, and in the case of each such
Triggering Event, proper provision shall be made to the Warrant Price and the
number of shares of Warrant Stock that may be purchased upon exercise of this
Warrant so that, upon the basis and the terms and in the manner provided in this
Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof
at any time after the consummation of such Triggering Event, to the extent this
Warrant is not exercised prior to such Triggering Event, to receive at the
Warrant Price as adjusted to take into account the consummation of such
Triggering Event, in lieu of the Common Stock issuable upon such exercise of
this Warrant prior to such Triggering Event, the Securities, to which such
Holder would have been entitled upon the consummation of such Triggering Event
if such Holder had exercised the rights represented by this Warrant immediately
prior thereto.  Immediately upon the occurrence of a Triggering Event,
the Issuer shall notify the Holder in writing of such Triggering Event and
provide the calculations in determining the number of shares of Warrant Stock
issuable upon exercise of the new warrant and the adjusted Warrant
Price.  Upon the Holder’s request, the continuing or surviving
corporation as a result of such Triggering Event shall issue to the Holder a new
warrant of like tenor evidencing the right to purchase the adjusted number of
shares of Warrant Stock and the adjusted Warrant Price pursuant to the terms and
provisions of this Section 4(a)(i).  Notwithstanding the foregoing to
the contrary, this Section 4(a)(i) shall only apply if the surviving entity
pursuant to any such Triggering Event is a company that has a class of equity
securities registered pursuant to the Securities Exchange Act of 1934, as
amended, and its common stock is listed or quoted on a national securities
exchange, national automated quotation system or the OTC Bulletin
Board.  In the event that the surviving entity pursuant to any such
Triggering Event is not a public company that is registered pursuant to the
Securities Exchange Act of 1934, as amended, or its common stock is not listed
or quoted on a national securities exchange, national automated quotation system
or the OTC Bulletin Board, then the Holder shall have the right to demand that
the Issuer pay to the Holder an amount in cash equal to the value of this
Warrant as of the date of the Triggering Event calculated in accordance with the
Black-Scholes formula.

       

      (ii)    In the
event that the Holder has elected not to exercise this Warrant prior to the
consummation of a Triggering Event, so long as the surviving entity pursuant to
any Triggering Event is a company that has a class of equity securities
registered pursuant to the Securities Exchange Act of 1934, as amended, and its
common stock is listed or quoted on a national securities exchange, national
automated quotation system or the OTC Bulletin Board, the surviving entity
and/or each Person (other than the Issuer) which may be required to deliver any
Securities, upon the exercise of this Warrant as provided herein shall assume,
by written instrument delivered to, and reasonably satisfactory to, the Holder
of this Warrant, (A) the obligations of the Issuer under this Warrant (and if
the Issuer shall survive the consummation of such Triggering Event, such
assumption shall be in addition to, and shall not release the Issuer from, any
continuing obligations of the Issuer under this Warrant) and (B) the obligation
to deliver to such Holder such Securitiesas, in accordance with the foregoing
provisions of this subsection (a), such Holder shall be entitled to receive, and
the surviving entity and/or each such Person shall have similarly delivered

       

      
        
          
          

        

        
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      to such
Holder an opinion of counsel for the surviving entity and/or each such Person,
which counsel shall be reasonably satisfactory to such Holder, or in the
alternative, a written acknowledgement executed by the President or Chief
Financial Officer of the Issuer, stating that this Warrant shall thereafter
continue in full force and effect and the terms hereof (including, without
limitation, all of the provisions of this subsection (a)) shall be applicable to
the Securities which the surviving entity and/or each such Person may be
required to deliver upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.

       

      (b)    Subdivisions and
Combinations.  If at any time the Issuer shall:

       

      (i)    subdivide
its outstanding shares of Common Stock into a larger number of shares of Common
Stock, or

       

      (ii)    combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.

       

      (c)    Other Provisions applicable
to Adjustments under this Section.  The following provisions
shall be applicable to the making of adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect provided for in this Section 4:

       

      (i)    When Adjustments to Be
Made.  The adjustments required by this Section 4 shall be made
whenever and as often as any specified event requiring an adjustment shall
occur, except that any adjustment of the number of shares of Common Stock for
which this Warrant is exercisable that would otherwise be required may be
postponed (except in the case of a subdivision or combination of shares of the
Common Stock, as provided for in Section 4(b)) up to, but not beyond the date of
exercise if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than one percent (1%) of the shares of
Common Stock for which this Warrant is exercisable immediately prior to the
making of such adjustment.  Any adjustment representing a change of
less than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made(x) as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment or (y) on the date of exercise.  For the purpose
of any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.

       

      (ii)    Fractional
Interests.  In computing ad-justments under this Section 4,
fractional interests in Common Stock shall be taken into account to the near-est
one one-hundredth (1/100th) of a share.

       

      
        
          
          

        

        
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      (d)    Form of Warrant after
Adjustments.  The form of this Warrant need not be changed
because of any adjustments in the Warrant Price or the number and kind of
Securities purchasable upon the exercise of this Warrant.

       

      5.    Notice of
Adjustments.  Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment.  Any dispute between the Issuer and
the Holder of this Warrant with respect to the matters set forth in such
certificate may at the option of the Holder of this Warrant be submitted to a
national or regional accounting firm reasonably acceptable to the Issuer and the
Holder, provided that the Issuer shall have ten (10) days after receipt of
notice from such Holder of its selection of such firm to object thereto, in
which case such Holder shall select another such firm and the Issuer shall have
no such right of objection.  The firm selected by the Holder of this
Warrant as provided in the preceding sentence shall be instructed to deliver a
written opinion as to such matters to the Issuer and such Holder within thirty
(30) days after submission to it of such dispute.  Such opinion shall
be final and binding on the parties hereto.  The costs and expenses of
the initial accounting firm shall be paid equally by the Issuer and the Holder
and, in the case of an objection by the Issuer, the costs and expenses of the
subsequent accounting firm shall be paid in full by the Issuer.

       

      6.    Fractional
Shares.  No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.

       

      7.    Ownership Cap and Exercise
Restriction.  Notwithstanding anything to the contrary set
forth in this Warrant, at no time may a Holder of this Warrant exercise this
Warrant if the number of shares of Common Stock to be issued pursuant to such
exercise would exceed, when aggregated with all other shares of Common Stock
owned by such Holder and its affiliates at such time, the number of shares of
Common Stock which would result in such Holder and its affiliates beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act and
the rules thereunder) in excess of 9.99% of the then issued and outstanding
shares of Common Stock; provided, however, that upon a holder of this Warrant
providing the Issuer with sixty-one (61) days notice (pursuant to Section 13
hereof) (the "Waiver Notice") that such Holder would like to waive this Section
7 with regard to any or all shares of Common Stock issuable upon exercise of
this Warrant, this Section 7 will be of no force or effect with regard to all or
a portion of the Warrant referenced in the Waiver Notice; provided, further,
that this provision shall be of no further force or effect during the sixty-one
(61) days immediately preceding the expiration of the term of this
Warrant.  Notwithstanding the foregoing, these exercise restrictions
shall not be applicable to Renaissance Capital Group, Inc.  and its
affiliates (collectively, "Renn"), if Renn so notifies the Issuer (either in
writing or by email) prior to the date of issuance of the securities to which
this paragraph is applicable.

       

      8.    Definitions.  For
the purposes of this Warrant, the following terms have the following
meanings:

       

      “Board" shall mean the
Board of Directors of the Issuer.

       

      "Capital Stock" means
and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.

       

      
        
          
          

        

        
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      "Certificate of
Designation" means the Certificate of Designation of the Relative Rights
and Preferences of the Series D Convertible Preferred Stock of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.

       

      "Certificate of
Incorporation" means the Certificate of Incorporation of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.

       

      "Common Stock" means
the Common Stock, $0.01 par value per share, of the Issuer and any other Capital
Stock into which such stock may hereafter be changed.

       

      "Governmental
Authority" means any governmental, regulatory or self-regulatory entity,
department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.

       

      "Holders" mean the
Persons who shall from time to time own any Warrant.  The term
"Holder" means one of the Holders.

       

      "Independent
Appraiser" means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Issuer) that is regularly engaged in the business of appraising the
Capital Stock or assets of corporations or other entities as going concerns, and
which is not affiliated with either the Issuer or the Holder of any
Warrant.

       

      "Issuer" means BPO
Management Services, Inc., a Delaware corporation, and its
successors.

       

      "Majority Holders"
means at any time the Holders of Warrants exercisable for a majority of the
shares of Warrant Stock issuable under the then-outstanding
Warrants.

       

      "Original Issue Date"
means June 13, 2007.

       

      "OTC Bulletin Board"
means the over-the-counter electronic bulletin board.

       

      "Other Common" means
any other Capital Stock of the Issuer of any class which shall be authorized at
any time after the date of this Warrant (other than Common Stock) and which
shall have the right to participate in the distribution of earnings and assets
of the Issuer without limitation as to amount.

       

      “Outstanding Common
Stock” means, at any given time, the aggregate amount of outstanding
shares of Common Stock, assuming full exercise, conversion or exchange (as
applicable) of all options, warrants and other Securities which are convertible
into or exercisable or exchangeable for, and any right to subscribe for, shares
of Common Stock that are outstanding at such time.

       

      
        
          
          

        

        
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      "Person" means an
individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.

       

      "Per Share Market
Value" means on any particular date (a) the last closing bid price per
share of the Common Stock on such date on the OTC Bulletin Board or a registered
national stock exchange on which the Common Stock is then listed, or if there is
no such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (b) if the Common
Stock is not quoted or listed then on the OTC Bulletin Board or any registered
national stock exchange, the last closing bid price for a share of Common Stock
in the over-the-counter market, as reported by the OTC Bulletin Board or in Pink
Sheets, LLC or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or Pink Sheets, LLC (or
similar organization or agency succeeding to its functions of reporting prices),
then the average of the "Pink Sheet" quotes for the applicable Trading Days
preceding such date of determination, or (d) if the Common Stock is not then
publicly traded the fair market value of a share of Common Stock as determined
by an Independent Appraiser selected in good faith by the Majority Holders;
provided, however, that the Issuer, after receipt of the determination by such
Independent Appraiser, shall have the right to select an additional Independent
Appraiser, in which case, the fair market value shall be equal to the average of
the determinations by each such Independent Appraiser; and provided, further
that all determinations of the Per Share Market Value shall be appropriately
adjusted for any stock dividends, stock splits or other similar transactions
during such period.  The determination of fair market value by an
Independent Appraiser shall be based upon the fair market value of the Issuer
determined on a going concern basis as between a willing buyer and a willing
seller and taking into account all relevant factors determinative of value, and
shall be final and binding on all parties.  In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.

       

      "Purchase Agreement"
means the Series D Convertible Preferred Stock Purchase Agreement dated as of
June 13, 2007, among the Issuer and the Purchasers.

       

      "Purchasers" means the
purchasers of the Series D Convertible Preferred Stock and the Warrants issued
by the Issuer pursuant to the Purchase Agreement.

       

      "Securities" means any
debt or equity securities of the Issuer, whether now or hereafter authorized,
any instrument convertible into or exchangeable for Securities or a Security,
and any option, warrant or other right to purchase or acquire any
Security.  "Security" means one of the Securities.

       

      "Securities Act" means
the Securities Act of 1933, as amended, or any similar federal statute then in
effect.

       

      "Subsidiary" means any
corporation at least 50% of whose outstanding Voting Stock shall at the time be
owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

       

      "Term" has the meaning
specified in Section 1 hereof.

       

      
        
          
          

        

        
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      "Trading Day" means
(a) a day on which the Common Stock is quoted on the OTC Bulletin Board, or (b)
if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by Pink
Sheets, LLC (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall
mean any day except Saturday, Sunday and any day which shall be a legal holiday
or a day on which banking institutions in the State of New York are authorized
or required by law or other government action to close.

       

      "Voting Stock" means,
as applied to the Capital Stock of any corporation, Capital Stock of any class
or classes (however designated) having ordinary voting power for the election of
a majority of the members of the Board (or other governing body) of such
corporation, other than Capital Stock having such power only by reason of the
happening of a contingency.

       

      "Warrants" means the
Warrants issued and sold pursuant to the Purchase Agreement, including, without
limitation, this Warrant, and any other warrants of like tenor issued in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

       

      "Warrant Price"
initially means $1.87, as such price may be adjusted from time to time in
accordance with the adjustments specified in this Warrant, including Section 4
hereto.

       

      "Warrant Share Number"
means at any time the aggregate number of shares of Warrant Stock which may at
such time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made under
the terms hereof.

       

      "Warrant Stock" means
Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants.

       

      9.    Other
Notices.  In case at any time:

       

      
        	
                 
      

              	
                (A)

              	
                the
      Issuer shall make any distributions to the holders of Common Stock;
      or

              

      

       

      
        	
                 
      

              	
                (B)

              	
                the
      Issuer shall authorize the granting to all holders of its Common Stock of
      rights to subscribe for or purchase any shares of Capital Stock of any
      class or other rights; or

              

      

       

      
        	
                 
      

              	
                (C)

              	
                there
      shall be any reclassification of the Capital Stock of the Issuer;
      or

              

      

       

      
        	
                 
      

              	
                (D)

              	
                there
      shall be any capital reorganization by the Issuer;
  or

              

      

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (E)

              	
                there
      shall be any (i) consolidation or merger involving the Issuer or (ii)
      sale, transfer or other disposition of all or substantially all of the
      Issuer's property, assets or business (except a merger or other
      reorganization in which the Issuer shall be the surviving corporation and
      its shares of Capital Stock shall continue to be outstanding and unchanged
      and except a consolidation, merger, sale, transfer or other disposition
      involving a wholly-owned Subsidiary);
or

              

      

       

      
        	
                 
      

              	
                (F)

              	
                there
      shall be a voluntary or involuntary dissolution, liquidation or winding-up
      of the Issuer or any partial liquidation of the Issuer or distribution to
      holders of Common Stock;

              

      

       

      then, in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take
place.  Such notice also shall specify the date as of which the
holders of Common Stock of record shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
certificates for Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be.  Such
notice shall be given at least twenty (20) days prior to the action in question
and not less than ten (10) days prior to the record date or the date on which
the Issuer's transfer books are closed in respect thereto.  This
Warrant entitles the Holder to receive copies of all financial and other
information distributed or required to be distributed to the holders of the
Common Stock.

       

      10.   Amendment and
Waiver.  Any term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Issuer and the
Majority Holders; provided, however, that no such amendment or waiver shall
reduce the Warrant Share Number, increase the Warrant Price, shorten the period
during which this Warrant may be exercised or modify any provision of this
Section 10 without the consent of the Holder of this Warrant.  No
consideration shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of this Warrant unless the same
consideration is also offered to all holders of the Warrants.

       

      11.   Governing Law;
Jurisdiction.  This Warrant shall be governed by and construed
in accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction.  This
Warrant shall not be interpreted or construed with any presumption against the
party causing this Warrant to be drafted.  The Issuer and the Holder
agree that venue for any dispute arising under this Warrant will lie exclusively
in the state or federal courts located in New York County, New York, and the
parties irrevocably waive any right to raise forum non conveniens or any other
argument that New York is not the proper venue.  The Issuer and the
Holder irrevocably consent to personal jurisdiction in the state and federal
courts of the state of New York.  The Issuer and the Holder consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing in this Section 12
shall affect or limit any right to serve process in any other manner permitted
by law.  The Issuer and the Holder hereby agree that the prevailing
party in any suit, action or proceeding arising out of or relating to this
Warrant or the Purchase Agreement, shall be entitled to reimbursement for
reasonable legal fees from the non-prevailing party.  The parties
hereby waive all rights to a trial by jury.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

         

      

      12.   Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by telecopy, e-mail or facsimile at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first
occur.  The addresses for such communications shall be:

       

      If to the
Issuer:

      BPO
Management Services, Inc.

      1290
N.  Hancock, Ste 200

      Anaheim,
CA 92807

      Attention:
Chief Executive Officer

      Tel.  No.:
(714) 974-2670

      Fax No.:
(714) 974-4771

      E-mail:
patrick.dolan@bpoms.com

      

      with
copies (which copies shall not constitute notice) to:

      

      Bryan
Cave LLP

      3161
Michelson Drive, Suite 1500

      Irvine,
CA 92612

      Attention:
Randolf W.  Katz, Esq.

      Tel.  No.:
(949) 223-7103

      Fax No.:
(949) 223-7100

      E-mail:
rwkatz@bryancavellp.com

      

      and

      Cornman
& Swartz

      19800
MacArthur Blvd., Suite 820

      Irvine,
CA 92612

      Attention:
Jack T.  Cornman, Esq.

      Tel.  No.:
(949) 224-1500

      Fax No.:
(949) 224-1505

      

      If to any
Holder: At the address of such Holder set forth on Exhibit A to the Purchase
Agreement or as specified in writing by such Holder with copies to:

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      

      Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.

       

      13.    Warrant
Agent.  The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.

       

      14.    Remedies.  The
Issuer stipulates that the remedies at law of the Holder of this Warrant in the
event of any default or threatened default by the Issuer in the performance of
or compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

       

      15.    Successors and
Assigns.  This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors and assigns of the
Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.

       

      16.    Modification and
Severability.  If, in any action before any court or agency
legally empowered to enforce any provision contained herein, any provision
hereof is found to be unenforceable, then such provision shall be deemed
modified to the extent necessary to make it enforceable by such court or
agency.  If any such provision is not enforceable as set forth in the
preceding sentence, the unenforceability of such provision shall not affect the
other provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.

       

      17.    Headings.  The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.

       

       

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the Issuer has executed this Amended and Restated Series A
Warrant as of the day and year first above written.

       

      
        	 	
                BPO
      MANAGEMENT SERVICES, INC.

                

                By:       
      __________________________     

                Name:

                Title: 

              

      

       

       

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      
EXERCISE
FORM

      SERIES
D WARRANT

      

      BPO
MANAGEMENT SERVICES, INC.

      

      The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Common Stock of BPO Management
Services, Inc.  covered by the within Warrant.

       

      Dated:
_________________

       

      
        	 	
                Signature       ________________________________________         

                Address       ___________________________________

                                  ___________________________________

              

      

       

      Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: _________________________

       

      The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.

       

      The
undersigned intends that payment of the Warrant Price shall be made as (check
one):

       

      Cash
Exercise_______

       

      Cashless
Exercise_______

       

      If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by
certified or official bank check (or via wire transfer) to the Issuer in
accordance with the terms of the Warrant.

       

      If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________.  The Issuer
shall pay a cash adjustment in respect of the fractional portion of the product
of the calculation set forth below in an amount equal to the product of the
fractional portion of such product and the Per Share Market Value on the date of
exercise, which product is ____________.

       

      X = Y -
(A)(Y)

                       
B

      

      Where:

       

      The
number of shares of Common Stock to be issued to the Holder
__________________(“X”).

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      The
number of shares of Common Stock purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised ___________________________ (“Y”).

       

      The
Warrant Price ______________ (“A”).

       

      The Per
Share Market Value of one share of Common Stock _______________________
(“B”).

       

      ASSIGNMENT

      

      FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

       

      
        Dated:
_________________

         

        
          	 	
                  Signature       ________________________________________         

                  Address       ___________________________________

                                    ___________________________________

                

        

         

      

      PARTIAL
ASSIGNMENT

      

      FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.

       

      
        Dated:
_________________

         

        
          	 	
                  Signature       ________________________________________         

                  Address       ___________________________________

                                    ___________________________________

                

        

      

       

      FOR
USE BY THE ISSUER ONLY:

      

      This
Warrant No.  W-___ canceled (or transferred or exchanged) this _____
day of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No.  W-_____ issued for ____ shares of Common
Stock in the name of _______________.

       

       

      17

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