Exhibit 10.3

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY STATE SECURITIES
LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE 1933 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, OR
(3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.

 

IN ADDITION, A PREFERRED STOCK PURCHASE AGREE-MENT DATED AS OF FEBRUARY 10, 2005
(THE “PURCHASE AGREEMENT”), A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT
ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS BETWEEN
THE PARTIES WITH RESPECT TO THIS WARRANT.

 

COMPUTER SOFTWARE INNOVATIONS, INC.

 

COMMON STOCK PURCHASE WARRANT “B”

 

Number of Shares: 3,608,868

   Holder: Barron Partners LP          

c/o Barron Capital Advisors LLC

Original Issue Date : February 11, 2005

       

Managing Partner

         

Attn: Andrew Barron Worden

         

730 Fifth Avenue, 9th Floor

Expiration Date: February 10, 2010

       

New York NY 10019

         

tel 212-659-7790

Exercise Price per Share: $2.0958

       

fax 646-607-2223

         

cell 917-854-0036

         

abw@barronpartners.com

 

Computer Software Innovations, Inc, a company organized and existing under the
laws of the State of Delaware F/K/A VerticalBuyer, Inc. (the “Company”), hereby
certifies that, for value received, BARRON PARTNERS LP, or its registered
assigns (the “Warrant Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company up to Three Million Six Hundred Eight
Thousand Eight Hundred Sixty-eight (3,608,868) shares (as adjusted from time to
time as provided in Section 7, the “Warrant Shares”) of common stock, $.001 par
value (the “Common Stock”), of the Company at a price of Two and 958/10,000
Dollars ($2.0958) per Warrant Share (as adjusted from time to time as provided
in Section 7, the “Exercise Price”), at any time and from time to time from and
after the date thereof and through and including 5:00 p.m. New York City time on
February     , 2010 (or eighteen months of effectiveness of a Registration
Statement

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subsequent to the issuance hereof (such eighteen months to be extended by one
month for each month or portion of a month during which a Registration
Statement’s effectiveness has lapsed or been suspended), whichever is
longer)(the “Expiration Date”), and subject to the following terms and
conditions:

 

1. Registration of Warrant. The Company shall register this Warrant upon records
to be maintained by the Company for that purpose (the “Warrant Register”), in
the name of the record Warrant Holder hereof from time to time. The Company may
deem and treat the registered Warrant Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Warrant Holder, and for all other purposes, and the Company shall not be
affected by notice to the contrary.

 

2. Investment Representation. The Warrant Holder by accepting this Warrant
represents that the Warrant Holder is acquiring this Warrant for its own account
or the account of an affiliate for investment purposes and not with the view to
any offering or distribution and that the Warrant Holder will not sell or
otherwise dispose of this Warrant or the underlying Warrant Shares in violation
of applicable securities laws. The Warrant Holder acknowledges that the
certificates representing any Warrant Shares will bear a legend indicating that
they have not been registered under the United States Securities Act of 1933, as
amended (the “1933 Act”) and may not be sold by the Warrant Holder except
pursuant to an effective registration statement or pursuant to an exemption from
registration requirements of the 1933 Act and in accordance with federal and
state securities laws. If this Warrant was acquired by the Warrant Holder
pursuant to the exemption from the registration requirements of the 1933 Act
afforded by Regulation S thereunder, the Warrant Holder acknowledges and
covenants that this Warrant may not be exercised by or on behalf of a Person
during the one year distribution compliance period (as defined in Regulation S)
following the date hereof. “Person” means an individual, partnership, firm,
limited liability company, trust, joint venture, association, corporation, or
any other legal entity.

 

3. Validity of Warrant and Issue of Shares. The Company represents and warrants
that this Warrant has been duly authorized and validly issued and warrants and
agrees that all of Common Stock that may be issued upon the exercise of the
rights represented by this Warrant will, when issued upon such exercise, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof. The Company further
warrants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of Common Stock to provide for the exercise of
the rights represented by this Warrant.

 

4. Registration of Transfers and Exchange of Warrants.

 

a. Subject to compliance with the legend set forth on the face of this Warrant,
the Company shall register the transfer of any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant with the Form of Assignment
attached

 

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hereto duly completed and signed, to the Company at the office specified in or
pursuant to Section 9. Upon any such registration or transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any such new
warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred
shall be issued to the transferee and a New Warrant evidencing the remaining
portion of this Warrant not so transferred, if any, shall be issued to the
transferring Warrant Holder. The acceptance of the New Warrant by the transferee
thereof shall be deemed the acceptance of such transferee of all of the rights
and obligations of a Warrant Holder of a Warrant.

 

b. This Warrant is exchangeable, upon the surrender hereof by the Warrant Holder
to the office of the Company specified in or pursuant to Section 9 for one or
more New Warrants, evidencing in the aggregate the right to purchase the number
of Warrant Shares which may then be purchased hereunder. Any such New Warrant
will be dated the date of such exchange.

 

5. Exercise of Warrants.

 

a. Upon surrender of this Warrant with the Form of Election to Purchase attached
hereto duly completed and signed to the Company, at its address set forth in
Section 9, and upon payment and delivery of the Exercise Price per Warrant Share
multiplied by the number of Warrant Shares that the Warrant Holder intends to
purchase hereunder, in lawful money of the United States of America, in cash or
by certified or official bank check or checks, to the Company, all as specified
by the Warrant Holder in the Form of Election to Purchase, the Company shall
promptly (but in no event later than 7 business days after the Date of Exercise
(as defined herein)) issue or cause to be issued and cause to be delivered to or
upon the written order of the Warrant Holder and in such name or names as the
Warrant Holder may designate (subject to the restrictions on transfer described
in the legend set forth on the face of this Warrant), a certificate for the
Warrant Shares issuable upon such exercise, with such restrictive legend as
required by the 1933 Act. Any person so designated by the Warrant Holder to
receive Warrant Shares shall be deemed to have become holder of record of such
Warrant Shares as of the Date of Exercise of this Warrant.

 

b. A “Date of Exercise” means the date on which the Company shall have received
(i) this Warrant (or any New Warrant, as applicable), with the Form of Election
to Purchase attached hereto (or attached to such New Warrant) appropriately
completed and duly signed, and (ii) payment of the Exercise Price for the number
of Warrant Shares so indicated by the Warrant Holder to be purchased.

 

c. This Warrant shall be exercisable at any time and from time to time for such
number of Warrant Shares as is indicated in the attached Form of Election To
Purchase. If less than all of the Warrant Shares which may be purchased under
this Warrant are exercised at any time, the Company shall issue or cause to be
issued, at its expense, a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares for which no exercise has been evidenced by
this Warrant.

 

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d. (i) Notwithstanding anything contained herein to the contrary, the holder of
this Warrant may, at its election exercised in its sole discretion, exercise
this Warrant in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment
of the Aggregate Exercise Price, elect instead to receive upon such exercise the
“Net Number” of shares of Common Stock determined according to the following
formula (a “Cashless Exercise”):

 

Net Number = (A x (B - C))/B

 

(ii) For purposes of the foregoing formula:

 

A= the total number shares with respect to which this Warrant is then being
exercised.

 

B= the last reported sale price (as reported by Bloomberg) of the Common Stock
on the trading day immediately preceding the date of the Exercise Notice.

 

C= the Warrant Exercise Price then in effect at the time of such exercise.

 

e. The holder of this Warrant agrees not to elect a Cashless Exercise for a
period of one (1) year. The holder of this Warrant also agrees not to elect a
Cashless Exercise so long as there is an effective registration statement for
the Warrant Shares.

 

6. Maximum Exercise. The Warrant Holder shall not be entitled to exercise this
Warrant on a Date of Exercise in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Warrant Holder and its affiliates on an exercise
date, and (ii) the number of shares of Common Stock issuable upon the exercise
of this Warrant with respect to which the determination of this limitation is
being made on an exercise date, which would result in beneficial ownership by
the Warrant Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock on such date. For the purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder. Subject to the foregoing, the Warrant Holder shall not be
limited to aggregate exercises which would result in the issuance of more than
4.99%. The restriction described in this paragraph may be revoked upon sixty-one
(61) days prior notice from the Warrant Holder to the Company. The Warrant
Holder may allocate which of the equity of the Company deemed beneficially owned
by the Warrant Holder shall be included in the 4.99% amount described above and
which shall be allocated to the excess above 4.99%.

 

7. Adjustment of Exercise Price and Number of Shares. The character of the
shares of stock or other securities at the time issuable upon exercise of this
Warrant

 

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and the Exercise Price therefore, are subject to adjustment upon the occurrence
of the following events, and all such adjustments shall be cumulative:

 

a. Adjustment for Stock Splits, Stock Dividends, Recapitalizations, Etc. The
Exercise Price of this Warrant and the number of shares of Common Stock or other
securities at the time issuable upon exercise of this Warrant shall be
appropriately adjusted to reflect any stock dividend, stock split, combination
of shares, reclassification, recapitalization or other similar event affecting
the number of outstanding shares of stock or securities.

 

b. Adjustment for Reorganization, Consolidation, Merger, Etc. In case of any
consolidation or merger of the Company with or into any other corporation,
entity or person, or any other corporate reorganization, in which the Company
shall not be the continuing or surviving entity of such consolidation, merger or
reorganization (any such transaction being hereinafter referred to as a
“Reorganization”), then, in each case, the holder of this Warrant, on exercise
hereof at any time after the consummation or effective date of such
Reorganization (the “Effective Date”), shall receive, in lieu of the shares of
stock or other securities at any time issuable upon the exercise of the Warrant
issuable on such exercise prior to the Effective Date, the stock and other
securities and property (including cash) to which such holder would have been
entitled upon the Effective Date if such holder had exercised this Warrant
immediately prior thereto (all subject to further adjustment as provided in this
Warrant).

 

c. Certificate as to Adjustments. In case of any adjustment or readjustment in
the price or kind of securities issuable on the exercise of this Warrant, the
Company will promptly give written notice thereof to the holder of this Warrant
in the form of a certificate, certified and confirmed by the Board of Directors
of the Company, setting forth such adjustment or readjustment and showing in
reasonable detail the facts upon which such adjustment or readjustment is based.

 

8. Fractional Shares. The Company shall not be required to issue or cause to be
issued fractional Warrant Shares on the exercise of this Warrant. The number of
full Warrant Shares that shall be issuable upon the exercise of this Warrant
shall be computed on the basis of the aggregate number of Warrants Shares
purchasable on exercise of this Warrant so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 8, be issuable on
the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price multiplied by such fraction or (ii)
round the number of Warrant Shares issuable, up to the next whole number.

 

9. Sale or Merger of the Company. In the event of a sale of all or substantially
all of the assets of the Company or the merger or consolidation of the Company
in a transaction in which the Company is not the surviving entity, the 4.99%
restriction will immediately be released and the Warrant Holder will have the
right to exercise the warrants concurrent with the sale.

 

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10. Notice of Intent to Sell or Merge the Company. The Company will give Warrant
Holder seventy (70) days notice before the event of a sale of all or
substantially all of the assets of the Company or the merger or consolidation of
the Company in a transaction in which the Company is not the surviving entity

 

11. Issuance of Substitute Warrant. In the event of a merger, consolidation,
recapitalization or reorganization of the Company or a reclassification of
Company shares of stock, which results in an adjustment to the number of shares
subject to this Warrant and/or the Exercise Price hereunder, the Company agrees
to issue to the Warrant Holder a substitute Warrant reflecting the adjusted
number of shares and/or Exercise Price upon the surrender of this Warrant to the
Company.

 

12. Notice. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given (i) on the date they are delivered if
delivered in person; (ii) on the date initially received if delivered by
facsimile transmission followed by registered or certified mail confirmation;
(iii) on the date delivered by an overnight courier service; or (iv) on the
third business day after it is mailed by registered or certified mail, return
receipt requested with postage and other fees prepaid as follows:

 

   

If to the Company:

   

Computer Software Innovations, Inc.

   

1661 East Main Street, Suite A

   

Easley, South Carolina 29642

   

Attention: Nancy K. Hedrick, President

   

If to the Warrant Holder:

   

Barron Capital Advisors LLCManaging Partner

   

Barron Partners LP

   

Attn: Andrew Barron Worden

   

730 Fifth Avenue, 9th Floor

   

New York NY 10019

   

tel 212-659-7790

 

13. Miscellaneous.

 

a. This Warrant shall be binding on and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Warrant may
be amended only by a writing signed by the Company and the Warrant Holder.

 

b. Nothing in this Warrant shall be construed to give to any person or
corporation other than the Company and the Warrant Holder any legal or equitable
right, remedy or cause of action under this Warrant; this Warrant shall be for
the sole and exclusive benefit of the Company and the Warrant Holder.

 

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c. This Warrant shall be governed by, construed and enforced in accordance with
the internal laws of the State of New York without regard to the principles of
conflicts of law thereof.

 

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

 

e. In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceablilty of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonably
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

 

f. The Warrant Holder shall not, by virtue hereof, be entitled to any voting or
other rights of a shareholder of the Company, either at law or equity, and the
rights of the Warrant Holder are limited to those expressed in this Warrant.

 

[SIGNATURES ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
the authorized officer as of the date first above stated.

 

COMPUTER SOFTWARE INNOVATIONS, INC.,
a Delaware corporation

By:

 

/s/ Nancy K. Hedrick

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Nancy K. Hedrick

Its:

 

President and Chief Executive Officer

 

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FORM OF ELECTION TO PURCHASE

 

(To be executed by the Warrant Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)

 

To: Computer Software Innovations, Inc.:

 

In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase                     
shares of Common Stock (“Common Stock”), $.001 par value, of Computer Software
Innovations, Inc and encloses the warrant and $             for each Warrant
Share being purchased or an aggregate of $                     in cash or
certified or official bank check or checks, which sum represents the aggregate
Exercise Price (as defined in the Warrant) together with any applicable taxes
payable by the undersigned pursuant to the Warrant.

 

The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:

 

 

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(Please print name and address)

 

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(Please insert Social Security or Tax Identification Number)

 

If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:

 

 

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(Please print name and address)                                             

 

Dated:                     

   Name of Warrant Holder:           (Print)  

 

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          (By:)  

 

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          (Name:)  

 

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          (Title:)  

 

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          Signature must conform in all respects to name of Warrant Holder
as specified on the face of the Warrant

 

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