Document:

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.

    

    SERIES
      A
      WARRANT TO PURCHASE

    

    SHARES
      OF
      COMMON STOCK

    

    OF

    

    BPO
      MANAGEMENT SERVICES, INC.

    

    Expires
      June 12, 2010

    

    
      	
              No.:
                W-A-07- __

            	
              Number
                of Shares: ___________

            

    

    Date
      of
      Issuance: June 12, 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 12, 2007 and shall expire at 6:00
      p.m., eastern time, on June 12, 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. 

    

    (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

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    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 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.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (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.

    

    (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

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    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
      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

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    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) 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

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    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, cash and property 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
      (including the right of a stockholder to elect the type of consideration it
      will
      receive upon a Triggering Event), subject to adjustments (subsequent to such
      corporate action) as nearly equivalent as possible to the adjustments provided
      for elsewhere in this Section 4, and the Warrant Price shall be adjusted to
      equal the product of (A) the closing price of the common stock of the continuing
      or surviving corporation

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    as
      a
      result of such Triggering Event as of the date immediately preceding the date
      of
      the consummation of such Triggering Event multiplied by (B) the quotient of
      (i)
      the Warrant Price divided by (ii) the Per Share Market Value of the Common
      Stock
      as of the date immediately preceding the Original Issue Date. 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, cash or property 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,
      cash
      or property 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, cash
      or property 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) Stock
      Dividends, Subdivisions and Combinations.
      If at
      any time the Issuer shall:

    

       (i) make
      or
      issue or set a record date for the holders of the Common

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    Stock
      for
      the purpose of entitling them to receive a dividend payable in, or other
      distribution of, shares of Common Stock, 

    

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

    

       (iii)
       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) Certain
      Other Distributions.
      If at
      any time the Issuer shall make or issue or set a record date for the holders
      of
      the Common Stock for the purpose of entitling them to receive any divi-dend
      or
      other distribution of:

    

    (i) cash
      (other than a cash dividend payable out of earnings or earned surplus legally
      available for the payment of dividends under the laws of the jurisdiction of
      incorporation of the Issuer),

    

    (ii) any
      evidences of its indebtedness, any shares of stock of any class or any other
      securities or property of any nature whatsoever (other than cash, Common Stock
      Equivalents or Additional Shares of Common Stock), or

    

    (iii) any
      warrants or other rights to subscribe for or purchase any evidences of its
      indebtedness, any shares of stock of any class or any other securities or
      property of any nature whatsoever (other than cash, Common Stock Equivalents
      or
      Additional Shares of Common Stock), 

    

    then
      (1)
      the number of shares of Common Stock for which this Warrant is exercisable
      shall
      be adjusted to equal the product of the number of shares of Common Stock for
      which this Warrant is exercisable immediately prior to such adjustment
      multiplied by a fraction (A) the numerator of which shall be the Per Share
      Market Value of Common Stock at the date of taking such record and (B) the
      denominator of which shall be such Per Share Market Value minus the amount
      allocable to one share of Common Stock of any such cash so distributable and
      of
      the fair value (as determined in good faith by the Board and supported by an
      opinion from an investment banking firm mutually agreed upon by the Issuer
      and
      the Holder) of any and all such evidences of indebtedness, shares of stock,
      other securities or property or warrants or other subscription or purchase
      rights so distributable, 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. A
      reclassification of the Common Stock (other than a change in par value, or
      from
      par value to no par value or from no par value to par value) into shares of
      Common Stock and

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    shares
      of
      any other class of stock shall be deemed a distribution by the Issuer to the
      holders of its Common Stock of such shares of such other class of stock within
      the meaning of this Section 4(c) and, if the outstanding shares of Common Stock
      shall be changed into a larger or smaller number of shares of Common Stock
      as a
      part of such reclassification, such change shall be deemed a subdivision or
      combination, as the case may be, of the outstanding shares of Common Stock
      within the meaning of Section 4(b). 

    

    (d) Issuance
      of Additional Shares of Common Stock.
      

    

    (i) Commencing
      on the Original Issue Date and for a period of one (1) year thereafter, in
      the
      event the Issuer shall issue any Additional Shares of Common Stock (otherwise
      than as provided in the foregoing subsections (b) through (c) of this Section
      4), at a price per share less than the Warrant Price then in effect or without
      consideration, then the Warrant Price upon each such issuance shall be adjusted
      to the price equal to the consideration per share paid for such Additional
      Shares of Common Stock.

    

    (ii) Commencing
      on the date that is one (1) year and one (1) day following the Original Issue
      Date, in the event the Issuer shall issue any Additional Shares of Common Stock
      (otherwise than as provided in the foregoing subsections (a) through (c) of
      this
      Section 4), at a price per share less than the Warrant Price then in effect
      or
      without consideration, then the Warrant Price upon each such issuance shall
      be
      adjusted to that price determined by multiplying the Warrant Price then in
      effect by a fraction:

     

    (A) the
      numerator of which shall be equal to the sum of (x) the number of shares of
      Outstanding Common Stock immediately prior to the issuance of such Additional
      Shares of Common Stock plus
      (y) the
      number of shares of Common Stock (rounded to the nearest whole share) which
      the
      aggregate consideration for the total number of such Additional Shares of Common
      Stock so issued would purchase at a price per share equal to the Warrant Price
      then in effect, and

     

    (B) the
      denominator of which shall be equal to the number of shares of Outstanding
      Common Stock immediately after the issuance of such Additional Shares of Common
      Stock.

    

    (iii) No
      adjustment of the number of shares of Common Stock for which this Warrant shall
      be exercisable shall be made under paragraphs (i) and (ii) of Section 4(d)
      upon
      the issuance of any Additional Shares of Common Stock which are issued pursuant
      to the exercise of any Common Stock Equivalents, if any such adjustment shall
      previously have been made upon the issuance of such Common Stock Equivalents
      (or
      upon the issuance of any warrant or other rights therefor) pursuant to Section
      4(e).

    

    (e)  Issuance
      of Common Stock Equivalents.
      If at
      any time the Issuer shall take a record of the holders of its Common Stock
      for
      the purpose of entitling them to receive a distribution of, or shall in any
      manner (whether directly or by assumption in a merger in which the Issuer is
      the
      surviving corporation) issue or sell, any Common Stock Equivalents, whether
      or
      not the rights to exchange or convert thereunder are immediately exercisable,
      and the price per share for which Common Stock is issuable upon such conversion
      or exchange shall be less than the Warrant Price in effect immediately prior
      to
      the time of such issue or sale, or if, after any such issuance of Common Stock
      Equivalents, the price per share for which Additional Shares of Common Stock
      may
      be issuable thereafter is amended or adjusted, and such price as so amended
      shall be less than the Warrant Price in effect at the time of such amendment
      or
      adjustment, then

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    the
      Warrant Price then in effect shall be adjusted as provided in Section 4(d).
      No
      further adjustments of the number of shares of Common Stock for which this
      Warrant is exercisable and the Warrant Price then in effect shall be made upon
      the actual issue of such Common Stock upon conversion or exchange of such Common
      Stock Equivalents.

    

    (f) Superseding
      Adjustment.
      If, at
      any time after any adjustment of the number of shares of Common Stock for which
      this Warrant is exercisable and the Warrant Price then in effect shall have
      been
      made pursuant to Section 4(e) as the result of any issuance of Common Stock
      Equivalents, and (i) such Common Stock Equivalents, or the right of conversion
      or exchange in such Common Stock Equivalents, shall expire, and all or a portion
      of such or the right of conversion or exchange with respect to all or a portion
      of such Common Stock Equivalents, as the case may be, shall not have been
      exercised, or (ii) the consideration per share for which shares of Common Stock
      are issuable pursuant to such Common Stock Equivalents shall be increased,
      then
      such previous adjustment shall be rescinded and annulled and the Additional
      Shares of Common Stock which were deemed to have been issued by virtue of the
      computation made in connection with the adjustment so rescinded and annulled
      shall no longer be deemed to have been issued by virtue of such computation.
      Upon the occurrence of an event set forth in this Section 4(f), there shall
      be a
      recomputation made of the effect of such Common Stock Equivalents on the basis
      of: (i) treating the number of Additional Shares of Common Stock theretofore
      actually issued or issuable pursuant to the previous exercise of Common Stock
      Equivalents or any such right of conversion or exchange, as having been issued
      on the date or dates of any such exercise and for the consideration actually
      received and receivable therefor, and (ii) treating any such Common Stock
      Equivalents which then remain outstanding as having been granted or issued
      immediately after the time of such increase of the consideration per share
      for
      which Additional Shares of Common Stock are issuable under such Common Stock
      Equivalents; whereupon a new ad-justment of the number of shares of Common
      Stock
      for which this Warrant is exercisable and the Warrant Price then in effect
      shall
      be made, which new adjustment shall supersede the previous adjustment so
      rescinded and annulled.

    

    (g) Other
      Provisions applicable to Adjustments under this Section.
      The
      following provisions shall be ap-plicable 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) Computation
      of Consideration.
      To the
      extent that any Additional Shares of Common Stock or any Common Stock
      Equivalents (or any warrants or other rights therefor) shall be issued for
      cash
      consideration, the consideration received by the Issuer therefor shall be the
      amount of the cash received by the Issuer therefor, or, if such Additional
      Shares of Common Stock or Common Stock Equivalents are offered by the Issuer
      for
      subscription, the subscription price, or, if such Additional Shares of Common
      Stock or Common Stock Equivalents are sold to underwriters or dealers for public
      offering without a subscription offering, the initial public offering price
      (in
      any such case subtracting any amounts paid or receivable for accrued interest
      or
      accrued dividends and without taking into account any compensation, discounts
      or
      expenses paid or incurred by the Issuer for and in the underwriting of, or
      otherwise in connection with, the issuance thereof). In connection with any
      merger or consolidation in which the Issuer is the surviving corporation (other
      than any consolidation or merger in which the previously outstanding shares
      of
      Common Stock of the Issuer shall be changed to or exchanged for the stock or
      other securities of another corporation), the amount of consideration therefor
      shall be deemed to be the fair value, as determined reasonably and in good
      faith
      by the Board, of such portion of the assets and business of the nonsurviving
      corporation as the Board may determine to be attributable to such shares of
      Common Stock or Common Stock Equivalents, as the case may be. 

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    The
      consideration for any Additional Shares of Common Stock issuable pursuant to
      any
      warrants or other rights to subscribe for or purchase the same shall be the
      consideration received by the Issuer for issuing such warrants or other rights
      plus the additional con-sideration payable to the Issuer upon exercise of such
      warrants or other rights. The consideration for any Additional Shares of Common
      Stock issuable pursuant to the terms of any Common Stock Equivalents shall
      be
      the consideration received by the Issuer for issuing war-rants or other rights
      to subscribe for or purchase such Common Stock Equivalents, plus the
      consideration paid or payable to the Issuer in respect of the subscription
      for
      or purchase of such Common Stock Equivalents, plus the additional consideration,
      if any, payable to the Issuer upon the exercise of the right of conversion
      or
      exchange in such Common Stock Equivalents. In the event of any consolidation
      or
      merger of the Issuer in which the Issuer is not the surviving corporation or
      in
      which the previously outstanding shares of Common Stock of the Issuer shall
      be
      changed into or exchanged for the stock or other securities of another
      corporation, or in the event of any sale of all or substantially all of the
      assets of the Issuer for stock or other securities of any corporation, the
      Issuer shall be deemed to have issued a number of shares of its Common Stock
      for
      stock or securities or other property of the other corporation computed on
      the
      basis of the actual exchange ratio on which the transaction was predicated,
      and
      for a consideration equal to the fair market value on the date of such
      transaction of all such stock or securities or other property of the other
      corporation. In the event any consideration received by the Issuer for any
      securities consists of property other than cash, the fair market value thereof
      at the time of issuance or as otherwise applicable shall be as determined in
      good faith by the Board. In the event Common Stock is issued with other shares
      or securities or other assets of the Issuer for consideration which covers
      both,
      the consideration computed as provided in this Section 4(h)(i) shall be
      allocated among such securities and assets as determined in good faith by the
      Board.

    

    (ii) 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.

    

    (iii) 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.

    

    (iv) When
      Adjustment Not Required.
      If the
      Issuer shall take a record of the holders of its Common Stock for the purpose
      of
      entitling them to receive a dividend or distribution or subscription or purchase
      rights and shall, thereafter and before the distribution to stockholders
      thereof, legally abandon its plan to pay or deliver such dividend, distribution,
      subscription or purchase rights, then thereafter no adjustment shall be required
      by reason of the taking of such record and any such adjustment previously made
      in respect thereof shall be rescinded and annulled.

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    (h) 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.

    

    (i) Escrow
      of Warrant Stock.
      If
      after any property becomes distributable pursuant to this Section 4 by reason
      of
      the taking of any record of the holders of Common Stock, but prior to the
      occurrence of the event for which such record is taken, and the Holder
      exer-cises this Warrant, any shares of Common Stock issuable upon exercise
      by
      reason of such adjustment shall be deemed the last shares of Common Stock for
      which this Warrant is exercised (notwithstanding any other provision to the
      contrary herein) and such shares or other property shall be held in escrow
      for
      the Holder by the Issuer to be issued to the Holder upon and to the extent
      that
      the event actually takes place, upon payment of the current Warrant Price.
      Notwithstanding any other provision to the contrary herein, if the event for
      which such record was taken fails to occur or is rescinded, then such escrowed
      shares shall be cancelled by the Issuer and escrowed property
      returned.

    

    (j) Acquisition
      Failure Redemption
      In the
      event of an Acquisition Failure Redemption (as defined in the Certificate of
      Designation) by the Holder, a percentage of the number of Warrants initially
      issued to the Holder under the Purchase Agreement equal to the Acquisition
      Failure Percentage (as defined below) shall automatically terminate and shall
      be
      returned to the Issuer by the Holder within five (5) business days of the
      Holder’s receipt of the Acquisition Failure Redemption Price (as defined in the
      Certificate of Designation). For purposes hereof, the “Acquisition
      Failure Percentage”
shall
      mean the quotient of (i) the number of shares of the Issuer's Series D
      Convertible Preferred Stock (the "Preferred
      Stock")
      that
      are redeemed by the Issuer in a completed Acquisition Failure Redemption (as
      defined in the Certificate of Designation) and (ii) the number of shares of
      Preferred Stock initially purchased by the Holder under the Purchase Agreement,
      and the “Acquisition
      Failure Amount”
shall
      mean the difference of the initial amount of the Acquisition Funds (as defined
      in the Purchase Agreement) and the amount of Acquisition Funds that the Issuer
      has paid directly to Approved Acquisition Targets (as defined in the Purchase
      Agreement) for those Acquisitions (as defined in the Purchase Agreement) that
      have been completed, consummated and closed, if any.

    

    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

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    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 at such
      time, the number of shares of Common Stock which would result in such Holder
      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.  Registration
      Rights.
      The
      Holder of this Warrant is entitled to the benefit of certain registration rights
      with respect to the shares of Warrant Stock issuable upon the exercise of this
      Warrant pursuant to that certain Registration Rights Agreement, of even date
      herewith, by and among the Issuer and Persons listed on Schedule I thereto
      (the
“Registration
      Rights Agreement”)
      and
      the registration rights with respect to the shares of Warrant Stock issuable
      upon the exercise of this Warrant by any subsequent Holder may only be assigned
      in accordance with the terms and provisions of the Registrations Rights
      Agreement.

    

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

    

    "Additional
      Shares of Common Stock"
      means
      all shares of Common Stock issued by the Issuer after the Original Issue Date,
      and all shares of Other Common, if any, issued by the Issuer after the Original
      Issue Date, except: (i) securities issued (other than for cash) in connection
      with a merger, acquisition, or consolidation, (ii) securities issued pursuant
      to
      the conversion or exercise of convertible or exercisable securities issued
      or
      outstanding on or prior to the date of the Purchase Agreement or issued pursuant
      to the Purchase Agreement (so long as the conversion or exercise price in such
      securities are not amended to lower such price and/or adversely affect the
      Holders), (iii) the Warrant Stock, (iv) securities issued in connection with
      bona fide strategic license agreements or other partnering arrangements so
      long
      as such issuances are not for the purpose of raising capital, (v) Common Stock
      issued or the issuance or grants of options to purchase Common Stock pursuant
      to
      the Issuer’s stock option plans and employee stock purchase plans that either
      (x) exist on the date of the Purchase Agreement and are duly approved by the
      Board or (y) are permitted under Section 9.15 of the Purchase Agreement, (vi)
      Common Stock issued as payment of dividends on the Series D Convertible
      Preferred

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    Stock
      issued pursuant to the Purchase Agreement, and (vii) any warrants issued to
      the
      placement agent and its designees for the transactions contemplated by the
      Purchase Agreement.

    

    “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.

    

    "Common
      Stock Equivalent"
      means
      any Convertible Security or warrant, option or other right to subscribe for
      or
      purchase any Additional Shares of Common Stock or any Convertible
      Security.

    

    "Convertible
      Securities"
      means
      evidences of Indebtedness, shares of Capital Stock or other Securities which
      are
      or may be at any time convertible into or exchangeable for Additional Shares
      of
      Common Stock. The term "Convertible Security" means one of the Convertible
      Securities.

    

    "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.

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    "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 12, 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

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    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
      12,
      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 $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

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    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.

    

    10. 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.

    

    11. 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

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    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 11 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. 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. 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 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 copies 

    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

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    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
      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:

    

    with
      copies (which copies 

    shall
      not
      constitute notice) 

    to:

    Sheppard,
      Mullin, Richter & Hampton LLP

    333
      S.
      Hope Street, 48th Floor

    Los
      Angeles, CA 90071

    Attention:
      David I. Sunkin, Esq.

    Tel
      No.:
      (213) 620-1780

    Fax
      No.:
      (213) 443-2750

    E-mail:
      dsunkin@sheppardmullin.com

    

    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. 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.

    

    15. 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.

    

    16. 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.

    

    17. 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

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

    this
      Warrant, but this Warrant shall be construed as if such unenforceable provision
      had never been contained herein.

    

    18. 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]

    

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

    

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

    

    

    BPO
      MANAGEMENT SERVICES, INC.

     

     

    By:

    
      
        

      

    

    Name:

    Title:

     

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

     

    EXERCISE
      FORM

    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”).

    

    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”). 

    
      
         

      

      
        -22-

        
          

        

      

      
         

      

    

    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 _______________.

     

    
      
         

      

      
        -23-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.

    

    SERIES
      B
      WARRANT TO PURCHASE

    

    SHARES
      OF
      COMMON STOCK

    

    OF

    

    BPO
      MANAGEMENT SERVICES, INC.

    

    Expires
      June 12, 2012

    

    
      	
              No.:
                W-B-07- __

            	
              Number
                of Shares: ___________

            

    

    Date
      of
      Issuance: June 12, 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 12, 2007 and shall expire at 6:00
      p.m., eastern time, on June 12, 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. 

    

    (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

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    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 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.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (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.

    

    (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

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    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
      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

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    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) 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

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    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, cash and property 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
      (including the right of a stockholder to elect the type of consideration it
      will
      receive upon a Triggering Event), subject to adjustments (subsequent to such
      corporate action) as nearly equivalent as possible to the adjustments provided
      for elsewhere in this Section 4, and the Warrant Price shall be adjusted to
      equal the product of (A) the closing price of the common stock of the continuing
      or surviving corporation

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    as
      a
      result of such Triggering Event as of the date immediately preceding the date
      of
      the consummation of such Triggering Event multiplied by (B) the quotient of
      (i)
      the Warrant Price divided by (ii) the Per Share Market Value of the Common
      Stock
      as of the date immediately preceding the Original Issue Date. 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, cash or property 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,
      cash
      or property 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, cash
      or property 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) Stock
      Dividends, Subdivisions and Combinations.
      If at
      any time the Issuer shall:

    

       (i) make
      or
      issue or set a record date for the holders of the Common Stock
      for
      the purpose of entitling them to receive a dividend payable in, or other
      distribution of, shares of Common Stock,

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    

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

    

       (iii)
       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) Certain
      Other Distributions.
      If at
      any time the Issuer shall make or issue or set a record date for the holders
      of
      the Common Stock for the purpose of entitling them to receive any divi-dend
      or
      other distribution of:

    

    (i) cash
      (other than a cash dividend payable out of earnings or earned surplus legally
      available for the payment of dividends under the laws of the jurisdiction of
      incorporation of the Issuer),

    

    (ii) any
      evidences of its indebtedness, any shares of stock of any class or any other
      securities or property of any nature whatsoever (other than cash, Common Stock
      Equivalents or Additional Shares of Common Stock), or

    

    (iii) any
      warrants or other rights to subscribe for or purchase any evidences of its
      indebtedness, any shares of stock of any class or any other securities or
      property of any nature whatsoever (other than cash, Common Stock Equivalents
      or
      Additional Shares of Common Stock), 

    

    then
      (1)
      the number of shares of Common Stock for which this Warrant is exercisable
      shall
      be adjusted to equal the product of the number of shares of Common Stock for
      which this Warrant is exercisable immediately prior to such adjustment
      multiplied by a fraction (A) the numerator of which shall be the Per Share
      Market Value of Common Stock at the date of taking such record and (B) the
      denominator of which shall be such Per Share Market Value minus the amount
      allocable to one share of Common Stock of any such cash so distributable and
      of
      the fair value (as determined in good faith by the Board and supported by an
      opinion from an investment banking firm mutually agreed upon by the Issuer
      and
      the Holder) of any and all such evidences of indebtedness, shares of stock,
      other securities or property or warrants or other subscription or purchase
      rights so distributable, 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. A
      reclassification of the Common Stock (other than a change in par value, or
      from
      par value to no par value or from no par value to par value) into shares of
      Common Stock and

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    shares
      of
      any other class of stock shall be deemed a distribution by the Issuer to the
      holders of its Common Stock of such shares of such other class of stock within
      the meaning of this Section 4(c) and, if the outstanding shares of Common Stock
      shall be changed into a larger or smaller number of shares of Common Stock
      as a
      part of such reclassification, such change shall be deemed a subdivision or
      combination, as the case may be, of the outstanding shares of Common Stock
      within the meaning of Section 4(b). 

    

    (d) Issuance
      of Additional Shares of Common Stock.
      

    

    (i) Commencing
      on the Original Issue Date and for a period of one (1) year thereafter, in
      the
      event the Issuer shall issue any Additional Shares of Common Stock (otherwise
      than as provided in the foregoing subsections (b) through (c) of this Section
      4), at a price per share less than the Warrant Price then in effect or without
      consideration, then the Warrant Price upon each such issuance shall be adjusted
      to the price equal to the consideration per share paid for such Additional
      Shares of Common Stock.

    

    (ii) Commencing
      on the date that is one (1) year and one (1) day following the Original Issue
      Date, in the event the Issuer shall issue any Additional Shares of Common Stock
      (otherwise than as provided in the foregoing subsections (a) through (c) of
      this
      Section 4), at a price per share less than the Warrant Price then in effect
      or
      without consideration, then the Warrant Price upon each such issuance shall
      be
      adjusted to that price determined by multiplying the Warrant Price then in
      effect by a fraction:

     

    (A) the
      numerator of which shall be equal to the sum of (x) the number of shares of
      Outstanding Common Stock immediately prior to the issuance of such Additional
      Shares of Common Stock plus
      (y) the
      number of shares of Common Stock (rounded to the nearest whole share) which
      the
      aggregate consideration for the total number of such Additional Shares of Common
      Stock so issued would purchase at a price per share equal to the Warrant Price
      then in effect, and

     

    (B) the
      denominator of which shall be equal to the number of shares of Outstanding
      Common Stock immediately after the issuance of such Additional Shares of Common
      Stock.

    

    (iii) No
      adjustment of the number of shares of Common Stock for which this Warrant shall
      be exercisable shall be made under paragraphs (i) and (ii) of Section 4(d)
      upon
      the issuance of any Additional Shares of Common Stock which are issued pursuant
      to the exercise of any Common Stock Equivalents, if any such adjustment shall
      previously have been made upon the issuance of such Common Stock Equivalents
      (or
      upon the issuance of any warrant or other rights therefor) pursuant to Section
      4(e).

    

    (e)  Issuance
      of Common Stock Equivalents.
      If at
      any time the Issuer shall take a record of the holders of its Common Stock
      for
      the purpose of entitling them to receive a distribution of, or shall in any
      manner (whether directly or by assumption in a merger in which the Issuer is
      the
      surviving corporation) issue or sell, any Common Stock Equivalents, whether
      or
      not the rights to exchange or convert thereunder are immediately exercisable,
      and the price per share for which Common Stock is issuable upon such conversion
      or exchange shall be less than the Warrant Price in effect immediately prior
      to
      the time of such issue or sale, or if, after any such issuance of Common Stock
      Equivalents, the price per share for which Additional Shares of Common Stock
      may
      be issuable thereafter is amended or adjusted, and such price as so amended
      shall be less than the Warrant Price in effect at the time of such amendment
      or
      adjustment, then

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    the
      Warrant Price then in effect shall be adjusted as provided in Section 4(d).
      No
      further adjustments of the number of shares of Common Stock for which this
      Warrant is exercisable and the Warrant Price then in effect shall be made upon
      the actual issue of such Common Stock upon conversion or exchange of such Common
      Stock Equivalents.

    

    (f) Superseding
      Adjustment.
      If, at
      any time after any adjustment of the number of shares of Common Stock for which
      this Warrant is exercisable and the Warrant Price then in effect shall have
      been
      made pursuant to Section 4(e) as the result of any issuance of Common Stock
      Equivalents, and (i) such Common Stock Equivalents, or the right of conversion
      or exchange in such Common Stock Equivalents, shall expire, and all or a portion
      of such or the right of conversion or exchange with respect to all or a portion
      of such Common Stock Equivalents, as the case may be, shall not have been
      exercised, or (ii) the consideration per share for which shares of Common Stock
      are issuable pursuant to such Common Stock Equivalents shall be increased,
      then
      such previous adjustment shall be rescinded and annulled and the Additional
      Shares of Common Stock which were deemed to have been issued by virtue of the
      computation made in connection with the adjustment so rescinded and annulled
      shall no longer be deemed to have been issued by virtue of such computation.
      Upon the occurrence of an event set forth in this Section 4(f), there shall
      be a
      recomputation made of the effect of such Common Stock Equivalents on the basis
      of: (i) treating the number of Additional Shares of Common Stock theretofore
      actually issued or issuable pursuant to the previous exercise of Common Stock
      Equivalents or any such right of conversion or exchange, as having been issued
      on the date or dates of any such exercise and for the consideration actually
      received and receivable therefor, and (ii) treating any such Common Stock
      Equivalents which then remain outstanding as having been granted or issued
      immediately after the time of such increase of the consideration per share
      for
      which Additional Shares of Common Stock are issuable under such Common Stock
      Equivalents; whereupon a new ad-justment of the number of shares of Common
      Stock
      for which this Warrant is exercisable and the Warrant Price then in effect
      shall
      be made, which new adjustment shall supersede the previous adjustment so
      rescinded and annulled.

    

    (g) Other
      Provisions applicable to Adjustments under this Section.
      The
      following provisions shall be ap-plicable 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) Computation
      of Consideration.
      To the
      extent that any Additional Shares of Common Stock or any Common Stock
      Equivalents (or any warrants or other rights therefor) shall be issued for
      cash
      consideration, the consideration received by the Issuer therefor shall be the
      amount of the cash received by the Issuer therefor, or, if such Additional
      Shares of Common Stock or Common Stock Equivalents are offered by the Issuer
      for
      subscription, the subscription price, or, if such Additional Shares of Common
      Stock or Common Stock Equivalents are sold to underwriters or dealers for public
      offering without a subscription offering, the initial public offering price
      (in
      any such case subtracting any amounts paid or receivable for accrued interest
      or
      accrued dividends and without taking into account any compensation, discounts
      or
      expenses paid or incurred by the Issuer for and in the underwriting of, or
      otherwise in connection with, the issuance thereof). In connection with any
      merger or consolidation in which the Issuer is the surviving corporation (other
      than any consolidation or merger in which the previously outstanding shares
      of
      Common Stock of the Issuer shall be changed to or exchanged for the stock or
      other securities of another corporation), the amount of consideration therefor
      shall be deemed to be the fair value, as determined reasonably and in good
      faith
      by the Board, of such portion of the assets and business of the nonsurviving
      corporation as the Board may determine to be attributable to such shares of
      Common Stock or Common Stock Equivalents, as the case may be. 

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    The
      consideration for any Additional Shares of Common Stock issuable pursuant to
      any
      warrants or other rights to subscribe for or purchase the same shall be the
      consideration received by the Issuer for issuing such warrants or other rights
      plus the additional con-sideration payable to the Issuer upon exercise of such
      warrants or other rights. The consideration for any Additional Shares of Common
      Stock issuable pursuant to the terms of any Common Stock Equivalents shall
      be
      the consideration received by the Issuer for issuing war-rants or other rights
      to subscribe for or purchase such Common Stock Equivalents, plus the
      consideration paid or payable to the Issuer in respect of the subscription
      for
      or purchase of such Common Stock Equivalents, plus the additional consideration,
      if any, payable to the Issuer upon the exercise of the right of conversion
      or
      exchange in such Common Stock Equivalents. In the event of any consolidation
      or
      merger of the Issuer in which the Issuer is not the surviving corporation or
      in
      which the previously outstanding shares of Common Stock of the Issuer shall
      be
      changed into or exchanged for the stock or other securities of another
      corporation, or in the event of any sale of all or substantially all of the
      assets of the Issuer for stock or other securities of any corporation, the
      Issuer shall be deemed to have issued a number of shares of its Common Stock
      for
      stock or securities or other property of the other corporation computed on
      the
      basis of the actual exchange ratio on which the transaction was predicated,
      and
      for a consideration equal to the fair market value on the date of such
      transaction of all such stock or securities or other property of the other
      corporation. In the event any consideration received by the Issuer for any
      securities consists of property other than cash, the fair market value thereof
      at the time of issuance or as otherwise applicable shall be as determined in
      good faith by the Board. In the event Common Stock is issued with other shares
      or securities or other assets of the Issuer for consideration which covers
      both,
      the consideration computed as provided in this Section 4(h)(i) shall be
      allocated among such securities and assets as determined in good faith by the
      Board.

    

    (ii) 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.

    

    (iii) 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.

    

    (iv) When
      Adjustment Not Required.
      If the
      Issuer shall take a record of the holders of its Common Stock for the purpose
      of
      entitling them to receive a dividend or distribution or subscription or purchase
      rights and shall, thereafter and before the distribution to stockholders
      thereof, legally abandon its plan to pay or deliver such dividend, distribution,
      subscription or purchase rights, then thereafter no adjustment shall be required
      by reason of the taking of such record and any such adjustment previously made
      in respect thereof shall be rescinded and annulled.

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    (h) 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.

    

    (i) Escrow
      of Warrant Stock.
      If
      after any property becomes distributable pursuant to this Section 4 by reason
      of
      the taking of any record of the holders of Common Stock, but prior to the
      occurrence of the event for which such record is taken, and the Holder
      exer-cises this Warrant, any shares of Common Stock issuable upon exercise
      by
      reason of such adjustment shall be deemed the last shares of Common Stock for
      which this Warrant is exercised (notwithstanding any other provision to the
      contrary herein) and such shares or other property shall be held in escrow
      for
      the Holder by the Issuer to be issued to the Holder upon and to the extent
      that
      the event actually takes place, upon payment of the current Warrant Price.
      Notwithstanding any other provision to the contrary herein, if the event for
      which such record was taken fails to occur or is rescinded, then such escrowed
      shares shall be cancelled by the Issuer and escrowed property
      returned.

    

    (j) Acquisition
      Failure Redemption In the event of an Acquisition Failure Redemption (as defined
      in the Certificate of Designation) by the Holder, a percentage of the number
      of
      Warrants initially issued to the Holder under the Purchase Agreement equal
      to
      the Acquisition Failure Percentage (as defined below) shall automatically
      terminate and shall be returned to the Issuer by the Holder within five (5)
      business days of the Holder’s receipt of the Acquisition Failure Redemption
      Price (as defined in the Certificate of Designation). For purposes hereof,
      the
“Acquisition Failure Percentage” shall mean the quotient of (i) the number of
      shares of the Issuer's Series D Convertible Preferred Stock (the "Preferred
      Stock") that are redeemed by the Issuer in a completed Acquisition Failure
      Redemption (as defined in the Certificate of Designation) and (ii) the number
      of
      shares of Preferred Stock initially purchased by the Holder under the Purchase
      Agreement, and the “Acquisition Failure Amount” shall mean the difference of the
      initial amount of the Acquisition Funds (as defined in the Purchase Agreement)
      and the amount of Acquisition Funds that the Issuer has paid directly to
      Approved Acquisition Targets (as defined in the Purchase Agreement) for those
      Acquisitions (as defined in the Purchase Agreement) that have been completed,
      consummated and closed, if any.

    

    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

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    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 at such
      time, the number of shares of Common Stock which would result in such Holder
      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.  Registration
      Rights.
      The
      Holder of this Warrant is entitled to the benefit of certain registration rights
      with respect to the shares of Warrant Stock issuable upon the exercise of this
      Warrant pursuant to that certain Registration Rights Agreement, of even date
      herewith, by and among the Issuer and Persons listed on Schedule I thereto
      (the
“Registration
      Rights Agreement”)
      and
      the registration rights with respect to the shares of Warrant Stock issuable
      upon the exercise of this Warrant by any subsequent Holder may only be assigned
      in accordance with the terms and provisions of the Registrations Rights
      Agreement.

    

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

    

    "Additional
      Shares of Common Stock"
      means
      all shares of Common Stock issued by the Issuer after the Original Issue Date,
      and all shares of Other Common, if any, issued by the Issuer after the Original
      Issue Date, except: (i) securities issued (other than for cash) in connection
      with a merger, acquisition, or consolidation, (ii) securities issued pursuant
      to
      the conversion or exercise of convertible or exercisable securities issued
      or
      outstanding on or prior to the date of the Purchase Agreement or issued pursuant
      to the Purchase Agreement (so long as the conversion or exercise price in such
      securities are not amended to lower such price and/or adversely affect the
      Holders), (iii) the Warrant Stock, (iv) securities issued in connection with
      bona fide strategic license agreements or other partnering arrangements so
      long
      as such issuances are not for the purpose of raising capital, (v) Common Stock
      issued or the issuance or grants of options to purchase Common Stock pursuant
      to
      the Issuer’s stock option plans and employee stock purchase plans that either
      (x) exist on the date of the Purchase Agreement and are duly approved by the
      Board or (y) are permitted under Section 9.15 of the Purchase Agreement, (vi)
      Common Stock issued as payment of dividends on the Series D Convertible
      Preferred

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    Stock
      issued pursuant to the Purchase Agreement, and (vii) any warrants issued to
      the
      placement agent and its designees for the transactions contemplated by the
      Purchase Agreement.

    

    “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.

    

    "Common
      Stock Equivalent"
      means
      any Convertible Security or warrant, option or other right to subscribe for
      or
      purchase any Additional Shares of Common Stock or any Convertible
      Security.

    

    "Convertible
      Securities"
      means
      evidences of Indebtedness, shares of Capital Stock or other Securities which
      are
      or may be at any time convertible into or exchangeable for Additional Shares
      of
      Common Stock. The term "Convertible Security" means one of the Convertible
      Securities.

    

    "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.

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    "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 12, 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

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    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
      12,
      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 $1.25, 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

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    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.

    

    10. 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.

    

    11. 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

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    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 11 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. 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. 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 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 copies 

    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

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    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
      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:

    

    with
      copies (which copies 

    shall
      not
      constitute notice) 

    to:

    Sheppard,
      Mullin, Richter & Hampton LLP

    333
      S.
      Hope Street, 48th Floor

    Los
      Angeles, CA 90071

    Attention:
      David I. Sunkin, Esq.

    Tel
      No.:
      (213) 620-1780

    Fax
      No.:
      (213) 443-2750

    E-mail:
      dsunkin@sheppardmullin.com

    

    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. 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.

    

    15. 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.

    

    16. 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.

    

    17. 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

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

    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.

    

    18. 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]

    

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

    

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

    

    

    BPO
      MANAGEMENT SERVICES, INC.

     

     

    By:

    
      
        

      

    

    Name:

    Title:

     

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

     

    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”).

    

    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”). 

    
      
         

      

      
        -22-

        
          

        

      

      
         

      

    

    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 _______________.

     

    
      
         

      

      
        -23-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]