UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): ~~December 31~~January 28, ~~2009~~2010

BPO Management Services, Inc.

~~BPO Management Services, Inc.~~ (Exact Name of Registrant as Specified in Its Charter)

Pennsylvania

~~Pennsylvania~~ (State or Other Jurisdiction of Incorporation)


0-13591		23-2214195

(Commission File Number)		(IRS Employer Identification No.)

1290 N. Hancock, Suite 200, Anaheim, CA		92807

(Address of Principal Executive Offices)		(Zip Code)

(714) 974-2670

(~~714) 974-2670 (~~Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 4 1.01~~: Changes~~ inENTRY ~~Registrant’s~~INTO ~~Certifying~~A ~~Accountant~~MATERIAL DEFINITIVE AGREEMENT.

~~BPO~~On January 29, 2010, BPO Management Services, Inc. (the “Company”), ~~was~~Healthaxis.com, Inc., ~~notified~~a ~~that~~Pennsylvania corporation and wholly owned subsidiary of the Company, ~~effective~~Healthaxis ~~January~~Managing 1Partner, ~~2010~~LLC, ~~certain~~a ~~partners~~Delaware oflimited ~~Moore~~liability ~~Stephens~~company ~~Wurth~~and wholly ~~Frazer~~owned ~~and~~subsidiary of the Company, Healthaxis Limited Partner, ~~Torbet~~LLC, ~~LLP~~a ~~(“MSWFT”)~~Delaware limited liability company and ~~Frost,~~wholly ~~PLLC~~owned subsidiary of the Company (“~~Frost~~Limited Partner”) ~~formed~~and ~~Frazer~~Healthaxis, ~~Frost~~Ltd., ~~LLP~~a Texas limited partnership and wholly owned subsidiary of the Company (“~~Frazer Frost~~Healthaxis”), entered into a Agreement ~~new~~and ~~partnership.~~Plan ~~Pursuant~~of toMerger (the ~~terms~~“Merger ofAgreement”) ~~a combination~~with ~~agreement~~unaffiliated by and ~~among~~privately ~~MSWFT~~owned Healthaxis Holdings, ~~Frazer~~LLC, ~~Frost~~a ~~and~~Delaware ~~Frost~~limited liability ~~(the~~company (“~~Combination Agreement~~Purchaser”), ~~each~~and Healthaxis, ofLLC, ~~MSWFT~~a Delaware limited liability company and ~~Frost~~wholly ~~contributed~~owned ~~all~~subsidiary of ~~their~~the ~~assets~~Purchaser ~~and certain~~(“Merger ofSub”). Under ~~their~~the ~~liabilities~~terms toof ~~Frazer~~the ~~Frost~~Merger Agreement, ~~resulting~~Healthaxis inwill ~~Frazer~~be merged ~~Frost~~with ~~assuming~~and ~~MSWFT’s engagement~~into ~~letter~~Merger ~~with~~Sub. Healthaxis is the ~~Company~~operating subsidiary ~~and~~in ~~becoming~~which all of the Company’s ~~new~~Healthcare ~~independent accounting~~division ~~firm. As~~operations ofare conducted, ~~the~~and ~~date~~includes ofHealthaxis, ~~this~~Ltd., ~~Current~~and ~~Report~~its subsidiaries, ~~Frazer Frost~~Healthaxis ~~is registered~~Imaging ~~with~~Services, ~~the~~LLC, ~~Public~~Healthaxis ~~Company~~Production ~~Accounting~~Processing, Inc. and ~~Oversight Board~~Satellite Image Systems (~~PCAOB~~Jamaica) Limited (the “Healthcare Subsidiaries”).

~~During~~The total ~~the~~merger ~~Company’s~~consideration ~~most~~payable ~~two~~to ~~recent~~the ~~fiscal~~Company ~~years~~from ~~ended~~the ~~December~~Purchaser ~~31, 2008 and 2007 and~~is ~~through January 1~~$2, ~~2010~~600,000. $2,400,000 of the ~~Company~~consideration ~~did~~is ~~not~~payable ~~consult~~at ~~with Frazer Frost on (i)~~closing, and the ~~application~~remaining of$200,000 ~~accounting~~is ~~principles~~subject to a ~~specified~~holdback and ~~transaction, either~~adjustment ~~completed~~(up or ~~proposed,~~down) orbased ~~the type of audit opinion that may be rendered~~ on ~~the Company’s~~certain ~~financial~~working ~~statements,~~capital and ~~Frazer~~cash ~~Frost~~tests ~~did~~related ~~not~~to ~~provide either a~~the ~~written~~final ~~report~~balance orsheet ~~oral~~of ~~advice to~~ the ~~Company~~businesses ~~that~~sold ~~was~~in ~~an important factor considered by~~ the ~~Company~~merger ~~in reaching a decision~~ as toof ~~any~~January ~~accounting~~31, ~~auditing,~~ or2010. The ~~financial~~holdback ~~reporting issue; or (ii) the subject of any disagreement~~amount, as ~~defined~~ inadjusted, ~~Item~~will ~~304~~be ~~(a)(1)(iv)~~released ofto ~~Regulation S-K and~~ the ~~related instructions,~~ orCompany ~~a reportable event within the meaning set forth~~ in ~~Item~~March ~~304(a)(1)(v) of Regulation S-K~~2010.

InThe ~~connection~~Agreement ~~with~~contains customary representations and warranties which survive the closing ~~audits~~for ofvarious periods, and the Company’s ~~financial~~and ~~statements~~its ~~for~~remaining ~~the~~subsidiaries ~~fiscal~~that ~~year~~are ~~ended~~parties ~~December~~to 31the Merger Agreement (collectively, ~~2008~~the ~~and~~“Sellers”) ~~2007~~have ~~and~~agreed ~~through~~to indemnify the ~~date~~Purchaser ofsubject ~~this~~to ~~Current Report,~~certain ~~there~~limitations ~~were:~~in ~~(i)~~the noevent ~~disagreements~~of ~~between~~adverse consequences suffered by the ~~Company~~Purchaser ~~and~~or ~~MSWFT~~Merger onSub if any ~~matters~~ of ~~accounting~~the representations, ~~principles~~warranties or ~~practices,~~covenants ~~financial~~in ~~statement~~the ~~disclosure,~~Merger Agreement are orbreached. The ~~auditing~~Agreement ~~scope~~also orcontains ~~procedures,~~various ~~which~~conditions ~~disagreements,~~that ifmust ~~not~~be satisfied ~~resolved~~by toboth ~~the satisfaction~~parties ofprior ~~MSWFT~~to closing, ~~would~~including ~~have~~(i) ~~caused~~a ~~MSWFT~~condition tothat ~~make~~the transaction ~~reference~~be toapproved ~~the~~by ~~subject matter~~holders of a majority of the ~~disagreement~~Company’s inSeries ~~their~~B Preferred ~~reports~~Stock, onand (ii) a condition that the Company’s ~~financial~~Chief Operating ~~statements~~Officer, ~~for~~John ~~such~~M. ~~years~~Carradine, ~~and~~enter ~~(ii)~~into noan ~~reportable~~employment ~~events~~agreement ~~within~~with the surviving ~~meaning~~company ~~set forth~~to inserve ~~Item~~as ~~304(a)(1)(v)~~its ofchief ~~Regulation~~executive ~~S-K~~officer.

~~The~~Under the ~~Company~~terms ~~has~~of ~~provided~~the ~~MSWFT~~Merger aAgreement, ~~copy~~Sellers ofare ~~the~~also ~~disclosures~~required into ~~this~~enter ~~Form~~into 8a confidentiality, non-Kcompetition and ~~has~~non-solicitation agreement pursuant to ~~requested~~which Sellers agree that ~~MSWFT~~for ~~furnish~~a itperiod ~~with~~of afive ~~letter~~(5) ~~addressed~~years tofrom the ~~Securities~~closing ~~and~~date, ~~Exchange~~Sellers ~~Commission~~will ~~stating~~not ~~whether~~to engage directly or indirectly in any business competitive to the business being sold. In addition, for a period of five (5) years from the closing date, the Sellers agree not ~~MSWFT~~to ~~agrees~~(i) ~~with~~induce or attempt to induce or encourage others to induce or attempt to induce, any person who is or during such period becomes an employee of, consultant to or agent of the ~~Company~~surviving company in the merger, to terminate such person’s ~~statements~~ employment with the surviving company (in ~~this~~the ~~Item~~case ~~4.01~~of an employee) or cease providing its services to the surviving company, or (aii). Ainduce ~~copy~~or attempt to induce or encourage others to induce or attempt to induce any person who is or during such period becomes a customer, supplier, referral source, or key business relationship of the surviving company to cease doing business with the ~~letter~~surviving ~~dated~~company ~~January~~or otherwise 7alter their relationship with the surviving company; or, ~~2010~~in the case of referral sources, to refer their business to any person engaged in a ~~furnished~~competing bybusiness ~~MSWFT~~with the surviving company; or, in ~~response~~the case of customers, to place ~~that~~their ~~request~~business iswith ~~filed~~any asperson ~~Exhibit~~engaged ~~16.1~~in tothe ~~this~~business of the companies ~~Form~~being ~~8-K~~sold in the merger.

ITEM 52.~~02:~~01 ~~Departure~~COMPLETION ofOF ~~Directors~~ACQUISITION orOR ~~Certain~~DISPOSITION ~~Officers;~~OF ~~Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers~~ASSETS.

OnThe ~~December~~transaction ~~31,~~described ~~2009,~~in ~~the~~Item ~~Company and BPOMS, Inc~~1.,01 ~~a wholly-owned subsidiary of the Company~~ (~~“Former BPOMS”), entered into an Employment Separation Agreement with Ronald K. Herbert,~~ the ~~Company’s~~description ~~Chief Financial Officer. Under the terms~~ of ~~the agreement,~~which ~~the~~is ~~Company,~~incorporated ~~Former BPOMS and Mr. Herbert agreed that his existing~~by ~~employment~~reference) ~~agreement~~was ~~would~~closed ~~be terminated immediately and that his employment with the Company and Former BPOMS would terminate effective as of the close of business~~ on January 1529, 2010 ~~(the “Termination Date”). In addition to payment of his normal base salary~~ and ~~other amounts due under Company policies through~~ the ~~Termination~~ ~~Date,~~merger ~~under~~became ~~the~~effective ~~terms of the agreement the Company has and will pay~~at ~~Mr.~~12:01am Herbert additional amounts up to a total maximum of $65,000 in certain circumstances, with such amounts being in full settlement of payments otherwise due under his original employment agreement. Under the terms of the Employment Separation Agreement and consistent with the terms of his existing employment agreement all of Mr. Herbert’s unvested restricted stock awards will become fully vested on ~~the~~January ~~Termination Date~~30, ~~and the terms of Mr~~2010. Herbert’s outstanding options to purchase Company common stock have been extended and shall be exercisable for a period of thirty-six (36) months after the Termination Date, subject to the terms of the applicable option plan. From the date of execution of the Employment Separation Agreement through the Termination Date, Mr. Herbert will continue to perform his normal duties as Chief Financial Officer of the Company, and following the Termination Date Mr. Herbert will cooperate with the Company regarding transition of outstanding business issues to the extent reasonably requested by the Company and agreed upon by the parties. The Employment Separation Agreement also includes a mutual release of claims.

~~Effective~~ ~~January~~ITEM ~~16, 2010, David Frear, the Company’s current Controller will become the Company’s Chief Accounting Officer~~5. ~~Mr.~~02: ~~Frear,~~DEPARTURE ~~age~~OF ~~51,~~DIRECTORS ~~has served as~~OR ~~the~~CERTAIN ~~Company’s~~OFFICERS; ~~Controller~~ELECTION ~~since~~OF ~~June~~DIRECTORS; ~~15,~~APPOINTMENT ~~2007. Mr.~~OF ~~Frear~~CERTAIN ~~served as~~OFFICERS; ~~Controller~~COMPENSATORY ~~for~~ARRANGEMENTS ~~Realigent,~~OF ~~Inc.~~CERTAIN ~~(formerly HomeSeekers~~OFFICERS.com) from February 2002 to October 2006. He began his career as a public accountant with Arthur Andersen and Company in Los Angeles, California. Mr. Frear received his bachelor’s of business administration from the University of Southern California and is a licensed Certified Public Accountant in the state of California.

~~ITEM~~In 9connection with, and as a condition to, the closing of the transaction described in Items 1.01: and 2.01, on January 29, 2010, the Company and BPOMS, Inc., a wholly-owned subsidiary of the Company (“Former BPOMS”), and the Healthcare Subsidiaries entered into a Release and Termination Agreement with John M. Carradine, the Company’s Chief Operating Officer. Under the terms of the agreement, the Company, Former BPOMS, the Healthcare Subsidiaries and Mr. Carradine agreed that his existing employment agreement would be terminated immediately and that his employment with the Company, Former BPOMS and the Healthcare Subsidiaries would terminate effective as of the close of business on January 29, 2010 (the “Termination Date”). In addition to payment of his normal base salary and other amounts due pursuant to Company policies through the Termination Date, under the terms of the agreement the Company paid Mr. Carradine $75,000, with such amount being in full settlement of all claims arising out of his past employment with the Company, Former BPOMS and the Healthcare Subsidiaries, including a full release of (i) any claims to post-termination compensation, benefits, or severance rights under the employment agreement with Former BPOMS arising or resulting from the termination thereof, including any such compensation, benefits or severance rights that may have otherwise been applicable thereunder to the extent the termination may be deemed a termination based on a change in control, (ii) all accrued but unpaid vacation, and (iii) any claims to the unpaid transition bonus described in the employment agreement. ~~Financial~~Under ~~Statements~~the terms of the Release and ~~Exhibits~~Termination Agreement and consistent with the terms of his employment agreement, all of Mr. Carradine’s unvested restricted stock awards became fully vested on the Termination Date, and the terms of Mr. Carradine’s outstanding options to purchase Company common stock have been extended and shall be exercisable for a period of thirty-six (36) months after the Termination Date, subject to the terms of the applicable option plan. At this time, the Company has no plans to appoint a new principal operating officer.

~~(d)~~ITEM 5.03: AMENDMENT TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR

Exhibit No.	Description
16.1	Letter dated January 7, 2010 to the Securities and Exchange Commission from Moore Stephens Wurth Frazer and Torbet, LLP

On January 28, 2010, the Board of Directors of the Company approved an amendment to the Company’s Second Amended and Restated Bylaws to replace Section 105 of the Company’s Bylaws in its entirety to permit any action required or permitted to be taken at a meeting of the shareholders or of a class of shareholders to be taken without a meeting upon the consent of shareholders who would have been entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. The amendment to the Company’s Second Amended and Restated Bylaws described above was effective on January 28, 2010.

The above described amendment to the Second Amended and Restated Bylaws is filed as Exhibit 3.1 and is incorporated herein by reference. The foregoing description of such amendment is qualified in its entirety by reference to the full text of such amendment attached hereto.

ITEM 9.01 EXHIBITS

Exhibit	Description

3.1	Second Amendment to the Company’s Second Amended and Restated Bylaws, effective as of January 28, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: ~~January~~February 73, 2010

BPO MANAGEMENT SERVICES, INC. By: /s/ ~~James~~David ~~Cortens~~Frear ~~James~~David ~~Cortens~~Frear ~~President~~Chief ~~and~~Accounting ~~Secretary~~Officer

EXHIBIT INDEX

Exhibit	Description

3.1	Second Amendment to the Company’s Second Amended and Restated Bylaws, effective as of January 28, 2010.

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