COMPUTER SOFTWARE INNOVATIONS, INC.Loan Agreement • August 31st, 2005 • Computer Software Innovations Inc • Services-computer integrated systems design
Under Article VIII of the Loan Agreement and the Bank’s Commitment Letter to CSI dated February 22, 2005 (the “Commitment Letter”), CSI agreed to observe certain financial covenants, including, but not limited to, a covenant that at the closing of the Revolving Line of Credit under the Loan Agreement, CSI would have a minimum tangible net worth of $600,000, inclusive of subordinated debt to CSI shareholders specifically subordinate to the Bank (the “Net Worth Covenant”). Previously, we indicated that we had been advised by our accountants that due to the classification of certain outstanding warrants to Barron Partners, LP, CSI was perhaps out of compliance with the Net Worth Covenant. By way of background, in February of 2005, CSI issued, as part of a preferred stock financing, two warrants to Barron Partners, LP representing the right to purchase a total of 7,217,736 shares of CSI common stock. The warrants have a term of five years. CSI used a fair value option pricing model to valu
