Document:

bpo_ex1059.htm

    EXHIBIT
10.59

     

    
      AMENDMENT TO SERIES A
WARRANT TO PURCHASE SHARES OF COMMON

      STOCK OF BPO MANAGEMENT
SERVICES, INC.

       

      This
Amendment to Series A Warrant to Purchase Shares of Common Stock of BPO
Management Services, Inc. (this “Amendment”) is effective as of
April 18, 2008, by BPO Management Services, Inc., a Delaware corporation (“Issuer”), in favor of
________________ (“Holder”).  Issuer
and Holder are, together, the “Parties.”

       

      RECITALS

       

      WHEREAS,
Issuer, Holder and certain other investors entered into that certain Series D
Convertible Preferred Stock Purchase Agreement, dated June 13, 2007 (the “Stock Purchase Agreement”),
pursuant to which Holder and the other investors purchased shares of Issuer’s
Series D Convertible Preferred Stock and warrants to purchase shares of Issuer’s
Series D-2 Convertible Preferred Stock and Common Stock (each of such warrants
is described below);

       

      WHEREAS,
in connection with the Stock Purchase Agreement, Issuer granted to Holder that
certain Series J Warrant to Purchase Shares of Preferred Stock of Issuer, which
was numbered W-J-07-__, was dated and issued June 13, 2007 (the “Series J Warrant”), and
entitled Holder upon exercise thereof in accordance with the terms contained
therein to purchase up to ______ shares of Issuer’s Series D-2 Convertible
Preferred Stock (the “Series J
Covered Shares”) at an initial per-share Warrant Price (as defined in
Section 9 of the Series J Warrant) of $14.40 (the “Series J Original Warrant
Price”);

       

      WHEREAS,
effective as of September 28, 2007, Issuer amended the Series J Warrant pursuant
to that certain Amendment to Series J Warrant to Purchase Shares of Preferred
Stock of Issuer (the “First
Amendment”) in order to reduce the Series J Warrant Price from $14.40 to
$9.60 for the period commencing on September 28, 2007 and ending on October 10,
2007;

       

      WHEREAS,
pursuant to the First Amendment, Holder exercised the Series J Warrant with
respect to _________ (or __________) of the Series J Covered Shares (the “Partial Series J
Exercise”);

       

      WHEREAS,
in connection with the Stock Purchase Agreement, Issuer also granted to Holder
(a) that certain Series A Warrant to Purchase Shares of Common Stock of Issuer,
which was numbered W-A-07-__, was dated and issued June 13, 2007 (the
“Series A Warrant”), and
entitled Holder upon exercise thereof in accordance with the terms contained
therein to purchase up to __________ shares of Issuer’s Common Stock at an
initial per-share Warrant Price (as defined in Section 9 of the Series A
Warrant) of $0.90; (b) that certain Series B Warrant to Purchase Shares of
Common Stock of Issuer, which was numbered W-B-07-__, was dated and issued
June 13, 2007 (the “Series
B Warrant”), and entitled Holder upon exercise thereof in accordance with
the terms contained therein to purchase up to _________ shares of Issuer’s
Common Stock at an initial per-share Warrant Price (as defined in Section 9 of
the Series B Warrant) of $1.25; (c) that certain Series C Warrant to Purchase
Shares of Common Stock of Issuer, which was numbered W-C-07-__, was dated and
issued June 13, 2007 (as amended from time to time, the “Series C Warrant”), and,
subject to certain conditions precedent, entitled Holder upon exercise thereof
in accordance with the terms contained therein to purchase up to ______ shares
of Issuer’s Common Stock (the “Series C Covered Shares”) at
an initial per-share Warrant Price (as defined in Section 9 of the Series C
Warrant) of $1.35 (the “Series
C Original Warrant Price”), as amended by that certain Amendment to
Series C Warrant to Purchase Shares of Common Stock of Issuer effective as of
September 28, 2007, which, following the Partial Series J Exercise reduced the
Series C Original Warrant Price as to ______ of the Series C Covered Shares to
$0.01 for the remainder of the term of the Series C Warrant, and (d) that
certain Series D Warrant to Purchase Shares of Common Stock of Issuer, which was
numbered W-D-07-__, was dated and issued June 13, 2007 (as amended from
time to time, the “Series D
Warrant” and, together with the Series J Warrant, the Series A Warrant,
the Series B Warrant, and the Series C Warrant, the “Warrants”), and, subject to
certain conditions precedent, entitled Holder upon exercise thereof in
accordance with the terms contained therein to purchase up to _________ shares
of Issuer’s Common Stock (the “Series D Covered Shares”) at
an initial per-share Warrant Price (as defined in Section 9 of the Series D
Warrant) of $1.87 (the “Series
D Original Warrant Price”), as amended by that certain Amendment to
Series D Warrant to Purchase Shares of Common Stock of Issuer effective as of
September 28, 2007, which following the Partial Series J Exercise reduced the
Series D Original Warrant Price as to ______ of the Series D Covered Shares to
$1.10 for the remainder of the term of the Series D Warrant;

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      WHEREAS,
pursuant to those certain Second Amendments to Series J Warrant to Purchase
Shares of Preferred Stock of Issuer (the “Second Amendment”) that Issuer
executed in favor of Holder and certain other parties who originally received
warrants at the same time and on the same terms as the Warrants (the “Other Warrant Holders”),
Issuer offered a reduction to the Series J Original Warrant Price from $14.40
per share to $9.60 per share of Series J Covered Shares for all of the
remaining, unexercised Series J Covered Shares (the “Series J Warrant Price
Reduction”), which reduction has been extended to be available until
April 25, 2008 (the “Reduced
Warrant Price Period”);

       

      WHEREAS,
pursuant to previous amendments to Series C Warrant to Purchase Shares of Common
Stock of Issuer and to Series D Warrant to Purchase Shares of Common Stock of
Issuer that Issuer executed in favor of Holder and the Other Warrant Holders,
Issuer agreed that Series C Original Warrant Price and Series D Original Warrant
Price was reduced,  effective for the remainder of the term of the
Series C Warrant and the Series D Warrant, respectively, each to $0.01 per share
for the same percentage of the Series C Covered Shares and Series D Covered
Shares as the percentage of the remaining, unexercised Series J Covered Shares
exercised between March 24, 2008 and April 25, 2008 (the “Series C and D Warrant Price
Reduction” and, together with the Series J Warrant Price Reduction, the
“Warrant Price
Reduction”);

       

      WHEREAS,
in order to simplify its capital structure, Issuer has decided to offer Holder
and the Other Warrant Holders the opportunity to exchange (following expiration
of the Reduced Warrant Price Period) all of their then-outstanding Series A
Warrants to Purchase Shares of Common Stock of Issuer, Series B Warrants to
Purchase Shares of Common Stock of Issuer, and Series D Warrants to Purchase
Shares of Common Stock of Issuer if such Series D Warrants have a warrant price
of $1.10 per share for shares of a to-be-designated series of Issuer’s preferred
stock (the “Warrant
Exchange”), which shares of such series of preferred stock will be
convertible into shares of Issuer’s common stock and have such other rights as
agreed upon among Issuer, Holder and the Other Warrant Holders and specified in
the certificate of designation of rights for such series;

       

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

       

      WHEREAS,
Section 11 of the Series A Warrant requires that the Series A Warrant be amended
only by written instrument(s) executed by Issuer and the holders of warrants
exercisable for a majority of the shares of Common Stock of Issuer issuable upon
exercise of the then-outstanding Series A Warrants issued to Holder and the
Other Warrant Holders (the “Majority
Holders”);

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      WHEREAS,
the Parties desire to amend the Series A Warrant to memorialize this
understanding and to execute amendments to all of the other
currently-outstanding Warrants held by Holder (in form and substance which is
substantially similar to this Amendment);

       

      WHEREAS,
the Certificate of Designation of the Relative Rights and Preferences of the
Series D Convertible Preferred Stock of Issuer (the “Series D Certificate of
Designation”) and the Certificate of Designation of the Relative Rights
and Preferences of the Series D-2 Convertible Preferred Stock of Issuer (the
“Series D-2 Certificate of
Designation” and, together with the Series D Certificate of Designation,
the “Certificates of
Designation”) provide for certain anti-dilution protection in the event
that Issuer issues any shares of its Common Stock or any warrants to purchase
its Common Stock for a per-share price less than the then-current applicable
conversion price of the Series D Convertible Preferred Stock and Series D-2
Convertible Preferred Stock of Issuer, respectively;

       

      WHEREAS,
Issuer and Holder desire to amend the Certificates of Designation and the
Warrants to exclude the Warrant Price Reduction and the Warrant Exchange from
the scope of the anti-dilution provisions thereof;

       

      WHEREAS,
Issuer shall be deemed to have obtained the signature of the Majority Holders,
and the amendment to each outstanding Series A Warrant of Holder and the Other
Warrant Holders shall be effective immediately, upon Issuer’s receipt of signed
acknowledgements to this Amendment and/or the amendments provided to the Other
Warrant Holders representing the requisite number of covered
shares.

       

      NOW,
THEREFORE, in consideration of the promises and covenants made herein, and for
such other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereby agree as follows:

       

      ARTICLE
1

      AMENDMENT

      

      1.           Amendment to Series A
Warrant.

       

      1.1           Section 4(d) - Issuance of
Additional Shares of Common Stock.  A new subsection (iv) shall
be added to Section 4(d) as follows:

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      “(iv)                      Notwithstanding
anything in this Section 4(d) or in Section 4(e) to the contrary,
any  amendment of the Warrants that reduces the warrant price
applicable to such Warrants and is approved by the Majority Holders, and any
issuance of Warrant Stock under the Warrants as so amended, shall not constitute
the issuance of any Additional Shares of Common Stock or Common Stock
Equivalents and, therefore, no adjustment shall be made under this Section 4(d)
or under Section 4(e) to the Warrant Price or the number of shares of Common
Stock for which this Warrant is exercisable in connection with such
issuance.”

       

      1.2           Section 4(e) – Issuance of
Common Stock Equivalents.  A new sentence shall be added to the
end of Section 4(e) as follows:

       

      “Notwithstanding
anything in the foregoing to the contrary, for purposes of this Section 4(e),
the issuance by Issuer of convertible securities of Issuer in exchange for any
Warrants (which exchange has been approved by the Majority Holders) shall not
constitute an issuance or sale of any Common Stock Equivalents and, therefore,
no adjustment shall be made to the Warrant Price or the number of shares of
Common Stock for which this Warrant is exercisable in connection with such
issuance.”

       

      1.3           Broad
Interpretation.  In addition to the specific amendments made to
the text of the Series A Warrant set forth herein, it is the Parties’ desire
that their intentions regarding this Amendment be broadly interpreted and
construed so that in no event will any actions taken by Issuer in connection
with the Warrant Price Reduction or the Warrant Exchange be deemed to trigger,
or give rise to the triggering of, any anti-dilution protection contained in the
Series A Warrant.

       

      1.4           Section 9 – Definition of
Additional Shares of Common Stock.  The definition of
“Additional Shares of Common Stock” contained in Section 9 of the Series A
Warrant shall be amended to (a) delete the word “and” immediately prior to
clause (vii); and (b) add new clauses (viii) and (ix) at the end of such
definition, which provides additional exclusions to such definition as
follows:  “(viii) any convertible securities issued by the Issuer in
connection with the exchange of any Warrants for such convertible securities
(which exchange is approved by the Majority Holders); and (ix) any securities
issued by the Issuer pursuant to the conversion of convertible securities issued
in connection with the exchange of any Warrants for such convertible securities
(which exchange is approved by the Majority Holders).”

       

      1.5           Effectiveness of
Amendment.  The foregoing amendment shall be effective and
binding upon Holder and its successors and assigns independently of whether
Holder executes and delivers this Amendment to Issuer in the event that Issuer
receives executed substantially similar written instruments from the Majority
Holders.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      ARTICLE
2

      MISCELLANEOUS
PROVISIONS

       

      2.           Miscellaneous
Provisions.

       

      2.1           No Further
Amendments.  Except as amended by this Amendment and the
previous amendments thereto, the Series A Warrant remains unmodified and in full
force and effect.  In the event of any inconsistency between the
provisions of the Series A Warrant (as previously amended) and the provisions of
this Amendment, the provisions of this Amendment shall prevail.  This
Amendment may only be modified or amended by a written agreement executed by
Issuer, and consented to by Holder, with the same formalities and in the
same manner as this Amendment.

       

      2.2           Counterparts.  This
Amendment may be executed in one or more counterparts, each of which shall be
deemed an original but all of which when taken together shall constitute one and
the same instrument.  Facsimiles or portable document files
transmitted by e-mail containing original signatures shall be deemed for all
purposes to be originally signed copies of the documents which are the subject
of such facsimiles or files.

       

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

       

      2.4           Entire Agreement.
 The Series A
Warrant as amended by this Amendment and all prior amendments thereto contains
the entire understanding between the Parties and supersedes any prior written or
oral agreements between them respecting the subject matter contained
herein.  There are no representations, agreements, arrangements or
understandings, oral or written, between the Parties relating to the subject
matter hereof that are not fully expressed herein.

       

      

       

      [SIGNATURE
PAGE TO FOLLOW]

       

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      IN
WITNESS WHEREOF, the Parties hereto have executed or have caused a duly
authorized officer to execute this Amendment all effective as of the day and
year first above written.

       

      
        	
                ISSUER:

              	 
      	 
      
	 	 	 
	
                BPO
      MANAGEMENT SERVICES, INC.,

                a
      Delaware corporation

              	 
      	 
      
	 
      	 
      	 
      
	
                By:     ______________________________

                Name:
      Patrick A. Dolan

                Its:      Chief
      Executive Officer

              	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                HOLDER:

              	 
      	 
      
	 	 	 
	
                The
      undersigned hereby consents to the amendments set forth
      herein.

                ____________________________________

              	 
      	 
      
	 
      	 
      	 
      
	
                By:________________________________

                Name:______________________________

                Its:________________________________

                Date:_______________________________ 

              	 
      	 
      
	 
      	 
      	 
      

      

      

       

      6bpo_ex1060.htm

    EXHIBIT
10.60

     

    
      AMENDMENT TO SERIES B
WARRANT TO PURCHASE SHARES OF

      COMMON STOCK OF BPO
MANAGEMENT SERVICES, INC.

       

      This
Amendment to Series B Warrant to Purchase Shares of Common Stock of BPO
Management Services, Inc. (this “Amendment”) is effective as of
April 18, 2008, by BPO Management Services, Inc., a Delaware corporation (“Issuer”), in favor of
__________________ (“Holder”).  Issuer
and Holder are, together, the “Parties.”

       

      RECITALS

       

      WHEREAS,
Issuer, Holder and certain other investors entered into that certain Series D
Convertible Preferred Stock Purchase Agreement, dated June 13, 2007 (the “Stock Purchase Agreement”),
pursuant to which Holder and the other investors purchased shares of Issuer’s
Series D Convertible Preferred Stock and warrants to purchase shares of Issuer’s
Series D-2 Convertible Preferred Stock and Common Stock (each of such warrants
is described below);

       

      WHEREAS,
in connection with the Stock Purchase Agreement, Issuer granted to Holder that
certain Series J Warrant to Purchase Shares of Preferred Stock of Issuer, which
was numbered W-J-07-__, was dated and issued June 13, 2007 (the “Series J Warrant”), and
entitled Holder upon exercise thereof in accordance with the terms contained
therein to purchase up to ___________ shares of Issuer’s Series D-2 Convertible
Preferred Stock (the “Series J
Covered Shares”) at an initial per-share Warrant Price (as defined in
Section 9 of the Series J Warrant) of $14.40 (the “Series J Original Warrant
Price”);

       

      WHEREAS,
effective as of September 28, 2007, Issuer amended the Series J Warrant pursuant
to that certain Amendment to Series J Warrant to Purchase Shares of Preferred
Stock of Issuer (the “First
Amendment”) in order to reduce the Series J Warrant Price from $14.40 to
$9.60 for the period commencing on September 28, 2007 and ending on October 10,
2007;

       

      WHEREAS,
pursuant to the First Amendment, Holder exercised the Series J Warrant with
respect to __________ (or __________) of the Series J Covered Shares (the “Partial Series J
Exercise”);

       

      WHEREAS,
in connection with the Stock Purchase Agreement, Issuer also granted to Holder
(a) that certain Series A Warrant to Purchase Shares of Common Stock of Issuer,
which was numbered W-A-07-__, was dated and issued June 13, 2007 (the
“Series A Warrant”), and
entitled Holder upon exercise thereof in accordance with the terms contained
therein to purchase up to ________ shares of Issuer’s Common Stock at an initial
per-share Warrant Price (as defined in Section 9 of the Series A Warrant) of
$0.90; (b) that certain Series B Warrant to Purchase Shares of Common Stock of
Issuer, which was numbered W-B-07-__, was dated and issued June 13, 2007
(the “Series B
Warrant”), and entitled Holder upon exercise thereof in accordance with
the terms contained therein to purchase up to ____________ shares of Issuer’s
Common Stock at an initial per-share Warrant Price (as defined in Section 9 of
the Series B Warrant) of $1.25; (c) that certain Series C Warrant to Purchase
Shares of Common Stock of Issuer, which was numbered W-C-07-__, was dated and
issued June 13, 2007 (as amended from time to time, the “Series C Warrant”), and,
subject to certain conditions precedent, entitled Holder upon exercise thereof
in accordance with the terms contained therein to purchase up to _________
shares of Issuer’s Common Stock (the “Series C Covered Shares”) at
an initial per-share Warrant Price (as defined in Section 9 of the Series C
Warrant) of $1.35 (the “Series
C Original Warrant Price”), as amended by that certain Amendment to
Series C Warrant to Purchase Shares of Common Stock of Issuer effective as of
September 28, 2007, which, following the Partial Series J Exercise reduced the
Series C Original Warrant Price as to __________ of the Series C Covered Shares
to $0.01 for the remainder of the term of the Series C Warrant, and (d) that
certain Series D Warrant to Purchase Shares of Common Stock of Issuer, which was
numbered W-D-07-__, was dated and issued June 13, 2007 (as amended from
time to time, the “Series D
Warrant” and, together with the Series J Warrant, the Series A Warrant,
the Series B Warrant, and the Series C Warrant, the “Warrants”), and, subject to
certain conditions precedent, entitled Holder upon exercise thereof in
accordance with the terms contained therein to purchase up to __________ shares
of Issuer’s Common Stock (the “Series D Covered Shares”) at
an initial per-share Warrant Price (as defined in Section 9 of the Series D
Warrant) of $1.87 (the “Series
D Original Warrant Price”), as amended by that certain Amendment to
Series D Warrant to Purchase Shares of Common Stock of Issuer effective as of
September 28, 2007, which following the Partial Series J Exercise reduced the
Series D Original Warrant Price as to ____________ of the Series D Covered
Shares to $1.10 for the remainder of the term of the Series D
Warrant;

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      WHEREAS,
pursuant to those certain Second Amendments to Series J Warrant to Purchase
Shares of Preferred Stock of Issuer (the “Second Amendment”) that Issuer
executed in favor of Holder and certain other parties who originally received
warrants at the same time and on the same terms as the Warrants (the “Other Warrant Holders”),
Issuer offered a reduction to the Series J Original Warrant Price from $14.40
per share to $9.60 per share of Series J Covered Shares for all of the
remaining, unexercised Series J Covered Shares (the “Series J Warrant Price
Reduction”), which reduction has been extended to be available until
April 25, 2008 (the “Reduced
Warrant Price Period”);

       

      WHEREAS,
pursuant to previous amendments to Series C Warrant to Purchase Shares of Common
Stock of Issuer and to Series D Warrant to Purchase Shares of Common Stock of
Issuer that Issuer executed in favor of Holder and the Other Warrant Holders,
Issuer agreed that Series C Original Warrant Price and Series D Original Warrant
Price was reduced,  effective for the remainder of the term of the
Series C Warrant and the Series D Warrant, respectively, each to $0.01 per share
for the same percentage of the Series C Covered Shares and Series D Covered
Shares as the percentage of the remaining, unexercised Series J Covered Shares
exercised between March 24, 2008 and April 25, 2008 (the “Series C and D Warrant Price
Reduction” and, together with the Series J Warrant Price Reduction, the
“Warrant Price
Reduction”);

       

      WHEREAS,
in order to simplify its capital structure, Issuer has decided to offer Holder
and the Other Warrant Holders the opportunity to exchange (following expiration
of the Reduced Warrant Price Period) all of their then-outstanding Series A
Warrants to Purchase Shares of Common Stock of Issuer, Series B Warrants to
Purchase Shares of Common Stock of Issuer, and Series D Warrants to Purchase
Shares of Common Stock of Issuer if such Series D Warrants have a warrant price
of $1.10 per share for shares of a to-be-designated series of Issuer’s preferred
stock (the “Warrant
Exchange”), which shares of such series of preferred stock will be
convertible into shares of Issuer’s common stock and have such other rights as
agreed upon among Issuer, Holder and the Other Warrant Holders and specified in
the certificate of designation of rights for such series;

       

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

       

      WHEREAS,
Section 11 of the Series B Warrant requires that the Series B Warrant be amended
only by written instrument(s) executed by Issuer and the holders of warrants
exercisable for a majority of the shares of Common Stock of Issuer issuable upon
exercise of the then-outstanding Series B Warrants issued to Holder and the
Other Warrant Holders (the “Majority
Holders”);

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      WHEREAS,
the Parties desire to amend the Series B Warrant to memorialize this
understanding and to execute amendments to all of the other
currently-outstanding Warrants held by Holder (in form and substance which is
substantially similar to this Amendment);

       

      WHEREAS,
the Certificate of Designation of the Relative Rights and Preferences of the
Series D Convertible Preferred Stock of Issuer (the “Series D Certificate of
Designation”) and the Certificate of Designation of the Relative Rights
and Preferences of the Series D-2 Convertible Preferred Stock of Issuer (the
“Series D-2 Certificate of
Designation” and, together with the Series D Certificate of Designation,
the “Certificates of
Designation”) provide for certain anti-dilution protection in the event
that Issuer issues any shares of its Common Stock or any warrants to purchase
its Common Stock for a per-share price less than the then-current applicable
conversion price of the Series D Convertible Preferred Stock and Series D-2
Convertible Preferred Stock of Issuer, respectively;

       

      WHEREAS,
Issuer and Holder desire to amend the Certificates of Designation and the
Warrants to exclude the Warrant Price Reduction and the Warrant Exchange from
the scope of the anti-dilution provisions thereof;

       

      WHEREAS,
Issuer shall be deemed to have obtained the signature of the Majority Holders,
and the amendment to each outstanding Series B Warrant of Holder and the Other
Warrant Holders shall be effective immediately, upon Issuer’s receipt of signed
acknowledgements to this Amendment and/or the amendments provided to the Other
Warrant Holders representing the requisite number of covered
shares.

       

      NOW,
THEREFORE, in consideration of the promises and covenants made herein, and for
such other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereby agree as follows:

       

      ARTICLE
1

      AMENDMENT

      

      1.           Amendment to Series B
Warrant.

       

      1.1           Section 4(d) - Issuance of
Additional Shares of Common Stock.  A new subsection (iv) shall
be added to Section 4(d) as follows:

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      “(iv)     Notwithstanding
anything in this Section 4(d) or in Section 4(e) to the contrary,
any  amendment of the Warrants that reduces the warrant price
applicable to such Warrants and is approved by the Majority Holders, and any
issuance of Warrant Stock under the Warrants as so amended, shall not constitute
the issuance of any Additional Shares of Common Stock or Common Stock
Equivalents and, therefore, no adjustment shall be made under this Section 4(d)
or under Section 4(e) to the Warrant Price or the number of shares of Common
Stock for which this Warrant is exercisable in connection with such
issuance.”

       

      1.2           Section 4(e) – Issuance of
Common Stock Equivalents.  A new sentence shall be added to the
end of Section 4(e) as follows:

       

      “Notwithstanding
anything in the foregoing to the contrary, for purposes of this Section 4(e),
the issuance by Issuer of convertible securities of Issuer in exchange for any
Warrants (which exchange has been approved by the Majority Holders) shall not
constitute an issuance or sale of any Common Stock Equivalents and, therefore,
no adjustment shall be made to the Warrant Price or the number of shares of
Common Stock for which this Warrant is exercisable in connection with such
issuance.”

       

      1.3           Broad
Interpretation.  In addition to the specific amendments made to
the text of the Series B Warrant set forth herein, it is the Parties’ desire
that their intentions regarding this Amendment be broadly interpreted and
construed so that in no event will any actions taken by Issuer in connection
with the Warrant Price Reduction or the Warrant Exchange be deemed to trigger,
or give rise to the triggering of, any anti-dilution protection contained in the
Series B Warrant.

       

      1.4           Section 9 – Definition of
Additional Shares of Common Stock.  The definition of
“Additional Shares of Common Stock” contained in Section 9 of the Series B
Warrant shall be amended to (a) delete the word “and” immediately prior to
clause (vii); and (b) add new clauses (viii) and (ix) at the end of such
definition, which provides additional exclusions to such definition as
follows:  “(viii) any convertible securities issued by the Issuer in
connection with the exchange of any Warrants for such convertible securities
(which exchange is approved by the Majority Holders); and (ix) any securities
issued by the Issuer pursuant to the conversion of convertible securities issued
in connection with the exchange of any Warrants for such convertible securities
(which exchange is approved by the Majority Holders).”

       

      1.5           Effectiveness of
Amendment.  The foregoing amendment shall be effective and
binding upon Holder and its successors and assigns independently of whether
Holder executes and delivers this Amendment to Issuer in the event that Issuer
receives executed substantially similar written instruments from the Majority
Holders.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      ARTICLE
2

      MISCELLANEOUS
PROVISIONS

       

      2.           Miscellaneous
Provisions.

       

      2.1           No Further
Amendments.  Except as amended by this Amendment and the
previous amendments thereto, the Series B Warrant remains unmodified and in full
force and effect.  In the event of any inconsistency between the
provisions of the Series B Warrant (as previously amended) and the provisions of
this Amendment, the provisions of this Amendment shall prevail.  This
Amendment may only be modified or amended by a written agreement executed by
Issuer, and consented to by Holder, with the same formalities and in the
same manner as this Amendment.

       

      2.2           Counterparts.  This
Amendment may be executed in one or more counterparts, each of which shall be
deemed an original but all of which when taken together shall constitute one and
the same instrument.  Facsimiles or portable document files
transmitted by e-mail containing original signatures shall be deemed for all
purposes to be originally signed copies of the documents which are the subject
of such facsimiles or files.

       

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

       

      2.4           Entire Agreement.
 The Series B
Warrant as amended by this Amendment and all prior amendments thereto contains
the entire understanding between the Parties and supersedes any prior written or
oral agreements between them respecting the subject matter contained
herein.  There are no representations, agreements, arrangements or
understandings, oral or written, between the Parties relating to the subject
matter hereof that are not fully expressed herein.

       

      

       

      [SIGNATURE
PAGE TO FOLLOW]

       

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      IN
WITNESS WHEREOF, the Parties hereto have executed or have caused a duly
authorized officer to execute this Amendment all effective as of the day and
year first above written.

       

      
        	
                ISSUER:

              	 
      	 
      
	 	 	 
	
                BPO
      MANAGEMENT SERVICES, INC.,

                a
      Delaware corporation

              	 
      	 
      
	 
      	 
      	 
      
	
                By:     ______________________________

                Name:
      Patrick A. Dolan

                Its:      Chief
      Executive Officer

              	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                HOLDER:

              	 
      	 
      
	 	 	 
	
                The
      undersigned hereby consents to the amendments set forth
      herein.

                ____________________________________

              	 
      	 
      
	 
      	 
      	 
      
	
                By:_______________________________

                Name:_____________________________

                Its:_______________________________

                Date:______________________________    

              	 
      	 
      
	 
      	 
      	 
      

      

      

       

      6

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