FIRST AMENDMENT TO PURCHASE AGREEMENT
FIRST
AMENDMENT TO PURCHASE AGREEMENT
This
First Amendment (this “Amendment”)
to
that certain Purchase Agreement (the “Original
Agreement”),
dated
as of September 30, 2006, by and among Emerge Capital Corp., a Delaware
Corporation (the “Purchaser”),
Kipling Holdings, Inc., a Delaware corporation (the “Company”)
and
Xxxxxxx X. Xxxxxxxx, an individual and the holder of one hundred percent (100%)
of the capital stock of the Company (the “Selling Shareholder”, and together
with The Purchaser and the Company, the “Parties”)
is
dated and made effective as of October 5, 2006.
RECITALS:
WHEREAS,
pursuant
to the Original Agreement,
the
Selling Shareholder sold to the Purchaser, and the Purchaser purchased from
the
Selling Shareholder, one hundred percent (100%) of the total issued and
outstanding capital stock of the Company in exchange for (a) the Purchaser’s
assumption of all of the liabilities of the Company, (b) the Purchaser expanding
the Existing Anti-Dilution Rights (as such term is defined in the Original
Agreement) in favor of the Selling Shareholder and (c) a nominal cash amount
equal to the direct costs incurred by the Selling Shareholder in connection
with
the Original Agreement, on the terms and conditions set forth
therein;
and
WHEREAS,
pursuant to the Original Agreement (a) the Selling Shareholder shall, within
five (5) business days following the Closing Date (as such term is defined
in
the Original Agreement) relinquish all Existing Dilution Rights (as such term
is
defined therein) by delivering those shares of the Purchaser’s Series B
preferred stock held by the Selling Shareholder and the Selling Shareholder’s
spouse and (b) the Purchaser shall, within five (5) days following the execution
of the Original Agreement, file with the Secretary of State of the State of
Delaware the Certificate of Designation (as such term is defined in the Original
Agreement) and receive confirmation from the State of the effectiveness of
such
Certificate of Designation; and
WHEREAS,
the
Parties desire to amend the Original Agreement to extend the time in which
(a)
the Selling Shareholder shall relinquish its Existing Dilution Rights and (b)
the Purchaser shall file the Certificate of Designation as is more fully set
forth herein.
NOW,
THEREFORE,
in
consideration of the mutual promises, conditions and covenants contained herein
and in the Employment Agreement, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the Parties hereto agree as follows:
AGREEMENT:
1. Amendment
to Section 1.2 of the Original Agreement.
The
Original Agreement is hereby amended by deleting Section 1.2 therein in its
entirety and by inserting in lieu thereof the following:
“1.2
Additional
Dilution Rights.
As
partial consideration for the acquisition by the Purchaser of all of the
outstanding capital stock of the Company in accordance with Section 1.1(b)
above, within fifteen (15) business days following the Closing Date (as defined
below), the Selling Shareholder shall relinquish all Existing Anti-Dilution
Rights by delivering to the Purchaser those shares of Emerge Series B Preferred
held by the Emerge Shareholders and, in exchange therefore, the Purchaser shall
issue and deliver to the Emerge Shareholders, in the denominations set forth
opposite each Emerge Shareholder’s name on Schedule
A
attached
hereto, shares of its convertible Series D preferred stock, par value $0.01
per
share (the “Emerge
Series D Preferred”).
The
Emerge Series D Preferred shares will have substantially the same powers,
designations, preferences and relative, participating, optional and other
special rights as the Emerge Series B Preferred except that holders of Emerge
Series D Preferred will receive those additional anti-dilution rights (the
“Additional
Anti-Dilution Rights”)
set
forth in Section 4 of that certain Certificate of Designation of Emerge Series
D
Preferred Stock (the “Certificate
of Designation”)
in the
form attached hereto as Exhibit
A.
Upon
the satisfaction of those obligations set forth in Section 1.4.4 (a) and (b)
herein the Emerge Series B Preferred shall be cancelled and be of no further
force or effect.”
2. Amendment
to Section 1.4.3 of the Original Agreement.
The
Original Agreement is hereby amended by deleting Section 1.4.3 therein in its
entirety and by inserting in lieu thereof the following:
“1.4.3 Within
fifteen (15) business days following the execution of this Agreement, the
Purchaser shall file with the Secretary of State of the State of Delaware the
Certificate of Designation and receive confirmation from the State of the
effectiveness of such Certificate of Designation.”
3. Full
Force and Effect.
Except
as expressly amended herein, all other terms and provisions of the Original
Agreement shall remain in full force and effect and are hereby ratified and
confirmed in all respects.
4. Counterparts.
This
Amendment may be executed in one (1) or more counterparts, each of which such
counterparts shall be deemed an original and all of which together shall
constitute one and the same Amendment.
5. Further
Amendments.
The
Original Agreement shall further be amended wherever appropriate to reflect
the
changes indicated above.
6. Recitals.
The
Recitals hereto are hereby incorporated into this Amendment as if fully stated
herein.
7. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware. The parties hereto agree that any claim, suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby shall be submitted for adjudication exclusively in any
state
or federal court sitting in Houston, Texas and each party hereto expressly
agrees to be bound by such selection of jurisdiction and venue for purposes
of
such adjudication. Each party (a) waives any objection which it may have that
such court is not a convenient forum for any such adjudication, (b) agrees
and
consents to the personal jurisdiction of such court with respect to any claim
or
dispute arising out of or relating to this Agreement or the transactions
contemplated hereby and (c) agrees that process issued out of such court or
in
accordance with the rules of practice of such court shall be properly served
if
served personally or served by certified mail or other form of substituted
service, as provided under the rules of practice of such court.
2
8. Opportunity
to Hire Counsel; Role of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx
LLP.
The
Selling Shareholder and the Company expressly acknowledge that they have been
advised and have been given an opportunity to hire counsel with respect to
this
Amendment and the transactions contemplated hereby. The Selling Shareholder
and
the Company further acknowledge that the law firm of Xxxxxxxxxxx & Xxxxxxxx
Xxxxxxxxx Xxxxxx LLP
did
not
provide them with any legal advice with respect to the transactions contemplated
by this Agreement. The Selling Shareholder and the Company further acknowledge
that the law firm of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
has
solely represented the Purchaser in connection with this Agreement and the
transactions contemplated hereby and no other person.
[Remainder
of Page Intentionally Left Blank]
3
IN
WITNESS WHEREOF,
the
Parties have executed this First Amendment as of the date first written
above.
|
Purchaser:
|
|
|
By: /s/
Xxxx Xxxxxx
|
|
|
Name:
Xxxx Xxxxxx
|
|
|
Title:
Controller
|
|
|
Company:
|
|
|
Kipling
Holdings, Inc.
|
|
|
By: /s/
Xxxxxxx X. Xxxxxxxx
|
|
|
Name:
Xxxxxxx X. Xxxxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
Selling
Shareholder:
|
|
|
Xxxxxxx
X. Xxxxxxxx, an Individual
|
|
|
By: /s/
Xxxxxxx X. Xxxxxxxx
|
|
|
Name:
Xxxxxxx X. Xxxxxxxx
|
|
4
