Exhibit 4.2
October 24, 2001
Berlwood Five, Ltd.
1201 North Watson Road, Suite 145
Arlington, Texas 76006
Re: Letter of Commitment, dated April 30, 2001, from Berlwood Five, Ltd. to
Emergisoft Holding, Inc.
Gentlemen:
On August 3, 2001, Emergisoft Holding, Inc. made its initial request for an
advance, in the amount of $150,000, under the referenced letter of commitment.
In connection with that request, Emergisoft delivered to Berlwood its promissory
note in the stated principal amount of $750,000, made payable to Berlwood Five,
Ltd. (the "First Note"), written to permit Emergisoft to borrow, from time to
time, amounts up to but not exceeding at any one time outstanding the stated
principal amount of the Note (the "Commitment Amount").
In addition to the First Note, Emergisoft also delivered to Berlwood on
August 3, 2001 a Warrant to Purchase Common Stock (the "First Warrant")
entitling Berlwood to purchase up to 600,000 shares of Emergisoft's common
stock, at an exercise price of $1.50 per share, at any time on or before August
3, 2011. A letter agreement between Emergisoft and Berlwood entered into at the
time of delivery of the First Note and the First Warrant required Emergisoft, at
the time of each future advance under the First Note, to issue to Berlwood a
similar warrant, with the number of shares for which any such warrant was
exercisable being determined by multiplying the dollar amount of the advance by
four.
On August 29, 2001, Emergisoft requested that Berlwood advance to
Emergisoft the entire remaining $600,000 balance of the Commitment Amount.
Berlwood and Emergisoft also agreed to the following modifications of the terms
of the August 3, 2001 letter agreement:
1. No future advances would be made by Berlwood to Emergisoft under the
First Note. The First Note and the First Warrant would remain in full force and
effect to evidence $150,000 of indebtedness of Emergisoft to Berlwood and to
evidence Berlwood's right to acquire up to 600,000 shares of Emergisoft's common
stock.
2. Emergisoft delivered its promissory note in the stated principal amount
of $600,000, made payable to Berlwood (the "Second Note"). The Second Note is
secured by security interests created by a Security Agreement and a Pledge
Agreement delivered along with the Second Note. Berlwood's advance of the
remaining Commitment Amount to Emergisoft would be made pursuant to the terms of
the Second Note.
3. In addition to the Second Note, the Security Agreement and the Pledge
Agreement, Emergisoft also delivered a Warrant to Purchase Common Stock (the
"Second Warrant"). Pursuant to the terms of the Second Warrant, Berlwood became
entitled to purchase up to 2,400,000 shares of Emergisoft common stock, at an
exercise price of $.75 per share, at any time on or before April 30, 2006.
4. Emergisoft increased the number of members of its Board of Directors
from seven to nine. Jeff Allen McCurdy, a representative of Berlwood, agreed to
fill one of the vacancies created by such increase. Jim Ryffel, a representative
of Westpoint Investors Limited Partnership, agreed to fill the second vacancy
created by the increase.
Emergisoft has now requested that Berlwood extend the maturity dates of the
First Note and the Second Note. In response to that request, Berlwood and
Emergisoft have agreed to the following modifications of the terms of the First
Note, the Second Note, the First Warrant and the Second Warrant:
1. The First Note and the Second Note will remain in full force and effect
to evidence $150,000 and $600,000, respectively, of Emergisoft's indebtedness to
Berlwood; provided, however, the First Note and the Second Note are hereby
modified solely to extend the maturity dates thereof from April 30, 2002 to
April 30, 2003.
2. The First Warrant and the Second Warrant will remain in full force and
effect to evidence Berlwood's right to acquire up to 600,000 and 2,400,000
shares, respectively, of Emergisoft's common stock; provided, however, the First
Warrant and the Second Warrant are hereby modified solely to change the exercise
price per share of each such warrant from $1.50 or $.75, as applicable, to
$.0267.
To evidence our agreement and understanding in the foregoing respects,
please sign a duplicate of this letter below in the place provided for your
signature and return the signed duplicate to Emergisoft.
Sincerely,
EMERGISOFT HOLDING, INC.,
a Nevada corporation
By: /s/ Dan Witte
--------------------------------
Name: Dan Witte
Title: Chief Operating Officer
and Chief Financial Officer
Agreed to and accepted this 24th day
of October, 2001:
BERLWOOD FIVE, LTD.
By: BERLWOOD THREE, L.L.C.,
General Partner
By: /s/ Linda Thomas
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Name: Linda Thomas
Title: Manager