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 Timothy J. Connolly, 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.”
 
 
 

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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.
 
 
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8. Opportunity to Hire Counsel; Role of Kirkpatrick & Lockhart Nicholson Graham
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 Kirkpatrick
& Lockhart Nicholson Graham 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 Kirkpatrick
& Lockhart Nicholson Graham LLP has solely represented the Purchaser in
connection with this Agreement and the transactions contemplated hereby and no
other person.
 

 
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IN WITNESS WHEREOF, the Parties have executed this First Amendment as of the
date first written above.
 

 
Purchaser:
     
Emerge Capital Corp.
     
By: /s/ Pete Shukis   
 
Name: Pete Shukis
 
Title: Controller 
         
Company:
     
Kipling Holdings, Inc.
     
By: /s/ Timothy J. Connolly   
 
Name: Timothy J. Connolly
 
Title: Chief Executive Officer
         
Selling Shareholder:
     
Timothy J. Connolly, an Individual
     
By: /s/ Timothy J. Connolly
 
Name: Timothy J. Connolly
   

 
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