REGISTRATION RIGHTS AGREEMENT

      This Registration  Rights Agreement (this "Agreement") is made and entered
into as of May , 2006, among Thomas Equipment, Inc., a Delaware corporation (the
"Company"),  and the  purchasers  signatory  hereto  (each such  purchaser  is a
"Purchaser" and all such purchasers are, collectively, the "Purchasers").

      This Agreement is made pursuant to certain  Modification  to  Registration
Rights and Dividend  Payment  Agreements,  dated as of the date hereof among the
Company,  Farwell Equity  Partners,  LLC and the Purchasers  (the  "Modification
Agreement").

      The Company and the Purchasers hereby agree as follows:

      1. Definitions

      CAPITALIZED  TERMS USED AND NOT OTHERWISE  DEFINED HEREIN THAT ARE DEFINED
IN THE  MODIFICATION  AGREEMENT  SHALL HAVE THE MEANINGS GIVEN SUCH TERMS IN THE
MODIFICATION  AGREEMENT.  As used in this  Agreement,  the following terms shall
have the following meanings:

            "Advice" shall have the meaning set forth in Section 6(c).

            "Holder" or "Holders"  means the holder or holders,  as the case may
      be, from time to time of Registrable Securities.

            "Indemnified Party" shall have the meaning set forth in Section 5(c)
      hereof.

            "Indemnifying  Party"  shall have the  meaning  set forth in Section
      5(c) hereof.

            "Losses" shall have the meaning set forth in Section 5(a).

            "Proceeding"  means  an  action,   claim,  suit,   investigation  or
      proceeding  (including,  without  limitation,  an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "Prospectus"  means  the  prospectus   included  in  a  Registration
      Statement (including,  without limitation,  a prospectus that includes any
      information  previously  omitted  from a  prospectus  filed  as part of an
      effective  registration  statement in reliance upon Rule 430A  promulgated
      under the Securities  Act), as amended or  supplemented  by any prospectus
      supplement,  with  respect to the terms of the  offering of any portion of
      the Registrable  Securities covered by a Registration  Statement,  and all
      other   amendments   and   supplements   to  the   Prospectus,   including
      post-effective  amendments,  and all material incorporated by reference or
      deemed to be incorporated by reference in such Prospectus.

            "Registrable  Securities" means, as of the date in question, (i) all
      of the  Payment  Shares,  (ii) all shares  issuable  upon  exercise of the
      Warrants,  and (iii) any  securities  issued  or  issuable  upon any stock
      split,  dividend or other distribution  recapitalization  or similar event
      with respect to the foregoing.


<PAGE>

            "Registration  Statement" means the registration statements required
      to be filed hereunder, including (in each case) the Prospectus, amendments
      and supplements to such  registration  statement or Prospectus,  including
      pre- and post-effective amendments, all exhibits thereto, and all material
      incorporated  by  reference or deemed to be  incorporated  by reference in
      such registration statement.

            "Rule 415" means Rule 415 promulgated by the Commission  pursuant to
      the Securities  Act, as such Rule may be amended from time to time, or any
      similar rule or  regulation  hereafter  adopted by the  Commission  having
      substantially the same purpose and effect as such Rule.

            "Rule 424" means Rule 424 promulgated by the Commission  pursuant to
      the Securities  Act, as such Rule may be amended from time to time, or any
      similar rule or  regulation  hereafter  adopted by the  Commission  having
      substantially the same purpose and effect as such Rule.


      2. Registration

      (a) On or  prior  to the  date  which  is one  year  from the date of this
Agreement  (the  "Filing  Date"),  the Company  shall  prepare and file with the
Securities and Exchange  Commission (the "Commission"),  a "Shelf"  Registration
Statement, covering the resale of the Registrable Securities on such Filing Date
for an  offering to be made on a  continuous  basis  pursuant  to Rule 415.  The
Registration  Statement  shall be on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3, in which
case  such  registration  shall be on  another  appropriate  form in  accordance
herewith)  and  shall  contain  (unless  otherwise   directed  by  the  Holders)
substantially the "Plan of Distribution"  attached hereto as Annex A. Subject to
the terms of this Agreement, the Company shall use its best efforts to cause the
Registration  Statement or  Post-Effective  Amendment  to be declared  effective
under the Securities Act as promptly as possible after the filing  thereof,  and
shall use its best efforts to keep such Registration Statement or Post-Effective
Amendment  continuously effective under the Securities Act until all Registrable
Securities covered by such Registration  Statement have been sold or may be sold
without volume restrictions pursuant to Rule 144(k) as determined by the counsel
to the Company  pursuant to a written  opinion letter to such effect,  addressed
and  acceptable to the Company's  transfer agent and the affected  Holders.  The
Company  shall  immediately  notify the Holders via  facsimile  or e-mail of the
effectiveness of the Registration  Statement or Post-Effective  Amendment on the
same day that the Company receives  notification of the  effectiveness  from the
Commission.

      (b) If a  Registration  Statement  is not filed on or prior to its  Filing
Date (any such failure  being  referred to as an "Event",  and the date on which
such Event occurs being  referred to as "Event  Date"),  then in addition to any
other  rights the Holders may have  hereunder or under  applicable  law, on each
monthly  anniversary of the Event Date (if the  applicable  Event shall not have
been cured by such date) until the Event is cured, the Company shall pay to each
Holder an amount in cash,  as partial  liquidated  damages and not as a penalty,
equal to 1% of the aggregate  value of the  Registrable  Securities then held by
such Holder.  The partial  liquidated damages pursuant to the terms hereof shall
apply on a daily  pro-rata basis for any portion of a month prior to the cure of
an Event.


                                       2
<PAGE>

      (c) If at any  time  prior  to the  expiration  date of the  Warrants  the
Company shall  determine to prepare and file with the  Commission a registration
statement  relating to an offering  for its own account or the account of others
under the Securities Act of 1933, as amended (the  "Securities  Act"), of any of
its equity  securities,  other than on Form S-4 or Form S-8 (each as promulgated
under  the  Securities  Act)  or  their  then  equivalents  relating  to  equity
securities to be issued solely in connection  with any acquisition of any entity
or business or equity securities issuable in connection with the stock option or
other  employee  benefit  plans,  then the  Company  shall send to each Holder a
written notice of such  determination and, if within five days after the date of
such  notice,  any such Holder  shall so request in writing,  the Company  shall
include  in such  registration  statement  all or any  part of such  Registrable
Securities  such holder requests to be registered;  provided,  that, the Company
shall not be required to register any  Registrable  Securities  pursuant to this
Section 2 that are eligible for resale pursuant to Rule 144(k) promulgated under
the  Securities  Act or that are the  subject of a then  effective  Registration
Statement.

      3. Registration Procedures

      (a) In connection with the Company's  registration  obligations hereunder,
the Company  shall not less than three  trading days prior to the filing of each
Registration  Statement or any related Prospectus or any amendment or supplement
thereto  (including  any  document  that would be  incorporated  or deemed to be
incorporated  therein by  reference),  the  Company  shall,  (i) furnish to each
Holder copies of all such documents proposed to be filed, which documents (other
than those  incorporated  or deemed to be  incorporated  by  reference)  will be
subject  to the  review  of such  Holders,  and  (ii)  cause  its  officers  and
directors,  counsel and independent  certified public  accountants to respond to
such inquiries as shall be necessary,  in the  reasonable  opinion of respective
counsel  to  conduct  a  reasonable  investigation  within  the  meaning  of the
Securities  Act. The Company  shall not file the  Registration  Statement or any
such Prospectus or any amendments or supplements thereto to which the Holders of
a majority of the Registrable  Securities shall reasonably object in good faith,
provided  that,  the  Company  is  notified  of such  objection,  including  the
substance of such objection, in writing no later than two Trading Days after the
Holders have been so furnished copies of such documents.  Each Holder, severally
and not jointly  agrees to furnish to the Company a completed  Questionnaire  in
the  form   attached  to  this   Agreement   as  Annex  B  (a  "Selling   Holder
Questionnaire") not less than two trading days prior to the proposed filing date
or by the end of the fourth  trading day following the date on which such Holder
receives draft materials in accordance with this Section.


                                       3
<PAGE>

      (b) The Company shall notify the Holders of  Registrable  Securities to be
sold (which  notice  shall,  pursuant to clauses (ii)  through  (vi) hereof,  be
accompanied by an  instruction  to suspend the use of the  Prospectus  until the
requisite  changes have been made) as promptly as reasonably  possible  (and, in
the case of (i)(A) below,  not less than five Trading Days prior to such filing)
and (if  requested by any such  Person)  confirm such notice in writing no later
than  one  Trading  Day  following  the  day  (i)(A)  when a  Prospectus  or any
Prospectus supplement or post-effective amendment to a Registration Statement is
proposed to be filed; (B) when the Commission notifies the Company whether there
will be a "review" of such  Registration  Statement and whenever the  Commission
comments in writing on such  Registration  Statement  (the Company shall provide
true and complete  copies thereof and all written  responses  thereto to each of
the  Holders);  and  (C)  with  respect  to  a  Registration  Statement  or  any
post-effective  amendment,  when  the  same has  become  effective;  (ii) of any
request by the Commission or any other Federal or state  governmental  authority
for amendments or  supplements to a Registration  Statement or Prospectus or for
additional  information;  (iii) of the issuance by the  Commission  or any other
federal  or state  governmental  authority  of any  stop  order  suspending  the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any  Proceedings  for that purpose;  (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification  or  exemption  from  qualification  of  any  of  the  Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding  for such purpose;  (v) of the  occurrence of any event or passage of
time that makes the financial  statements  included in a Registration  Statement
ineligible  for  inclusion  therein  or any  statement  made  in a  Registration
Statement  or  Prospectus  or  any  document   incorporated   or  deemed  to  be
incorporated  therein  by  reference  untrue  in any  material  respect  or that
requires  any  revisions  to  a  Registration  Statement,  Prospectus  or  other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue  statement of a material fact or
omit to state any material  fact  required to be stated  therein or necessary to
make the statements therein, in light of the circumstances under which they were
made,  not  misleading;  and (vi) the  occurrence  or  existence  of any pending
corporate  development with respect to the Company that the Company believes may
be material and that, in the  determination of the Company,  makes it not in the
best interest of the Company to allow continued availability of the Registration
Statement or  Prospectus;  provided that any and all of such  information  shall
remain  confidential  to each Holder until such  information  otherwise  becomes
public,  unless  disclosure by a Holder is required by law;  provided,  further,
notwithstanding  each Holder's agreement to keep such information  confidential,
the Holders  make no  acknowledgement  that any such  information  is  material,
non-public information.


      4.  Registration   Expenses.   All  fees  and  expenses  incident  to  the
performance  of or compliance  with this Agreement by the Company shall be borne
by the Company  whether or not any  Registrable  Securities are sold pursuant to
the Registration  Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including,  without  limitation,  fees and expenses (A) with respect to filings
required  to be made with the trading  market on which the Common  Stock is then
listed for trading,  and (B) in compliance with applicable  state  securities or
Blue Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue  Sky  qualifications  or  exemptions  of  the  Registrable  Securities  and
determination  of the eligibility of the  Registrable  Securities for investment
under the laws of such jurisdictions as requested by the Holders), (ii) printing
expenses (including,  without limitation,  expenses of printing certificates for
Registrable   Securities  and  of  printing  prospectuses  if  the  printing  of
prospectuses  is  reasonably  requested  by the  holders  of a  majority  of the
Registrable Securities included in a Registration  Statement),  (iii) messenger,
telephone and delivery expenses,  (iv) fees and disbursements of counsel for the
Company, (v) Securities Act liability insurance,  if the Company so desires such
insurance,  and (vi) fees and  expenses  of all other  persons  retained  by the
Company in connection with the consummation of the transactions  contemplated by
this  Agreement.  In addition,  the Company shall be responsible  for all of its
internal   expenses   incurred  in  connection  with  the  consummation  of  the
transactions contemplated by this Agreement (including,  without limitation, all
salaries  and  expenses  of its  officers  and  employees  performing  legal  or
accounting  duties),  the expense of any annual  audit and the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities  exchange  as  required  hereunder.  In no event shall the Company be
responsible  for any  broker or similar  commissions  or any legal fees or other
costs of the Holders.


                                       4
<PAGE>

      5. Indemnification

      (a) Indemnification by the Company. The Company shall, notwithstanding any
termination  of this  Agreement,  indemnify and hold  harmless each Holder,  the
officers,  directors,  agents,  brokers  (including  brokers  who offer and sell
Registrable  Securities  as  principal as a result of a pledge or any failure to
perform under a margin call of Common Stock),  investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the  Securities  Act or Section  20 of the  Exchange  Act) and the
officers,  directors,  agents and employees of each such controlling  Person, to
the fullest  extent  permitted by  applicable  law, from and against any and all
losses,  claims,  damages,  liabilities,  costs (including,  without limitation,
reasonable attorneys' fees) and expenses (collectively,  "Losses"), as incurred,
arising  out of or  relating  to any untrue or  alleged  untrue  statement  of a
material fact contained in a Registration Statement,  any Prospectus or any form
of prospectus or in any  amendment or supplement  thereto or in any  preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein  (in the case of any  Prospectus  or form of  prospectus  or
supplement  thereto,  in light of the circumstances  under which they were made)
not  misleading,  except to the extent,  but only to the  extent,  that (i) such
untrue statements or omissions are based solely upon information  regarding such
Holder  furnished  in writing to the  Company by such Holder  expressly  for use
therein,  or to the extent that such information  relates to such Holder or such
Holder's  proposed  method of  distribution  of  Registrable  Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in a
Registration  Statement,  such  Prospectus  or such form of Prospectus or in any
amendment  or  supplement  thereto  (it being  understood  that the  Holder  has
approved  Annex A hereto for this  purpose) or (ii) the use by such Holder of an
outdated or defective  Prospectus  after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the receipt by
such Holder of the Advice contemplated in Section 6(c). The Company shall notify
the Holders promptly of the  institution,  threat or assertion of any Proceeding
arising  from  or in  connection  with  the  transactions  contemplated  by this
Agreement of which the Company is aware.

      (b)  Indemnification  by Holders.  Each Holder  shall,  severally  and not
jointly,  indemnify  and hold  harmless the Company,  its  directors,  officers,
agents and employees,  each Person who controls the Company  (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors,  officers,  agents or employees of such controlling  Persons,  to the
fullest  extent  permitted by applicable  law,  from and against all Losses,  as
incurred,  to the extent  arising out of or based solely upon: (x) such Holder's
failure to comply with the prospectus  delivery  requirements  of the Securities
Act or (y) any untrue or alleged  untrue  statement of a material fact contained
in any Registration Statement, any Prospectus,  or any form of prospectus, or in
any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or  relating  to any  omission  or alleged  omission  of a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading (i) to the extent, but only to the extent, that such untrue statement
or omission is  contained  in any  information  so  furnished in writing by such
Holder to the Company specifically for inclusion in such Registration  Statement
or such  Prospectus  or (ii) to the extent  that (1) such untrue  statements  or
omissions are based solely upon  information  regarding such Holder furnished in
writing to the  Company by such  Holder  expressly  for use  therein,  or to the
extent that such  information  relates to such Holder or such Holder's  proposed
method of distribution of Registrable  Securities and was reviewed and expressly
approved  in  writing  by such  Holder  expressly  for  use in the  Registration
Statement (it being  understood  that the Holder has approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement  thereto or (2) in the case of the use by such  Holder of an outdated
or defective  Prospectus  after the Company has notified  such Holder in writing
that the  Prospectus  is outdated or defective  and prior to the receipt by such
Holder  of the  Advice  contemplated  in  Section  6(c).  In no event  shall the
liability of any selling  Holder  hereunder be greater in amount than the dollar
amount  of the  net  proceeds  received  by such  Holder  upon  the  sale of the
Registrable Securities giving rise to such indemnification obligation.


                                       5
<PAGE>

      (c) Conduct of  Indemnification  Proceedings.  If any Proceeding  shall be
brought or asserted  against  any Person  entitled to  indemnity  hereunder  (an
"Indemnified  Party"),  such Indemnified  Party shall promptly notify the Person
from whom  indemnity is sought (the  "Indemnifying  Party") in writing,  and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of counsel  reasonably  satisfactory to the Indemnified Party and
the  payment  of all fees and  expenses  incurred  in  connection  with  defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve  the  Indemnifying  Party of its  obligations  or  liabilities
pursuant  to this  Agreement,  except  (and only) to the extent that it shall be
finally determined by a court of competent  jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have prejudiced
the Indemnifying Party.

      An Indemnified  Party shall have the right to employ  separate  counsel in
any such Proceeding and to participate in the defense thereof,  but the fees and
expenses of such counsel  shall be at the expense of such  Indemnified  Party or
Parties  unless:  (1) the  Indemnifying  Party has agreed in writing to pay such
fees and  expenses;  (2) the  Indemnifying  Party shall have failed  promptly to
assume  the  defense  of  such  Proceeding  and  to  employ  counsel  reasonably
satisfactory to such Indemnified Party in any such Proceeding;  or (3) the named
parties to any such Proceeding  (including any impleaded  parties)  include both
such Indemnified  Party and the Indemnifying  Party, and such Indemnified  Party
shall reasonably believe that a material conflict of interest is likely to exist
if  the  same  counsel  were  to  represent  such  Indemnified   Party  and  the
Indemnifying  Party (in which  case,  if such  Indemnified  Party  notifies  the
Indemnifying  Party in writing that it elects to employ separate  counsel at the
expense of the Indemnifying  Party,  the  Indemnifying  Party shall not have the
right to assume the defense  thereof and the reasonable fees and expenses of one
separate  counsel  shall  be at the  expense  of the  Indemnifying  Party).  The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected  without its written  consent,  which consent shall not be unreasonably
withheld.  No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any  Indemnified  Party is a party,  unless  such  settlement  includes an
unconditional  release of such  Indemnified  Party from all  liability on claims
that are the subject matter of such Proceeding.


                                       6
<PAGE>

      Subject to the terms of this  Agreement,  all reasonable fees and expenses
of the Indemnified  Party (including  reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such Proceeding
in a manner not inconsistent with this Section) shall be paid to the Indemnified
Party,  as incurred,  within ten Trading Days of written  notice  thereof to the
Indemnifying  Party;  provided,   that  the  Indemnified  Party  shall  promptly
reimburse  the  Indemnifying  Party for that  portion of such fees and  expenses
applicable to such actions for which such  Indemnified  Party is not entitled to
indemnification  hereunder,  determined  based upon the  relative  faults of the
parties.

      (d)  Contribution.  If a claim for  indemnification  under Section 5(a) or
5(b) is  unavailable  to an  Indemnified  Party (by  reason of public  policy or
otherwise),   then  each  Indemnifying  Party,  in  lieu  of  indemnifying  such
Indemnified  Party,  shall  contribute  to the  amount  paid or  payable by such
Indemnified  Party  as a  result  of  such  Losses,  in  such  proportion  as is
appropriate  to  reflect  the  relative  fault  of the  Indemnifying  Party  and
Indemnified  Party in connection with the actions,  statements or omissions that
resulted in such Losses as well as any other relevant equitable  considerations.
The relative fault of such  Indemnifying  Party and  Indemnified  Party shall be
determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information  supplied by, such Indemnifying  Party or Indemnified Party, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent  such  action,  statement  or  omission.  The amount  paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the  limitations set forth in this  Agreement,  any reasonable  attorneys' or
other reasonable fees or expenses  incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the  indemnification  provided for in this Section was  available to
such party in accordance with its terms.

      The  parties  hereto  agree  that it would  not be just and  equitable  if
contribution  pursuant  to  this  Section  5(d)  were  determined  by  pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds  actually  received  by such  Holder  from the sale of the  Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has  otherwise  been  required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud by
such Holder.


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<PAGE>

      The indemnity and contribution agreements contained in this Section are in
addition  to any  liability  that  the  Indemnifying  Parties  may  have  to the
Indemnified Parties.

      6. Miscellaneous

      (a) Remedies.  In the event of a breach by the Company or by a Holder,  of
any of their obligations under this Agreement, each other Holder or the Company,
as the case may be, in addition to being entitled to exercise all rights granted
by law and under this Agreement, including recovery of damages, will be entitled
to specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide  adequate  compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement  and  hereby  further  agrees  that,  in the event of any  action  for
specific  performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

      (b)  Compliance.  Each Holder,  severally  and not jointly,  covenants and
agrees that it will  comply with the  prospectus  delivery  requirements  of the
Securities  Act as  applicable  to it in  connection  with sales of  Registrable
Securities pursuant to the Registration Statement.

      (c)  Discontinued  Disposition.  Each Holder,  severally  and not jointly,
agrees by its acquisition of such Registrable Securities that, upon receipt of a
notice from the Company of the  occurrence of any event of the kind described in
Section  3(b),  such  Holder  will  forthwith  discontinue  disposition  of such
Registrable  Securities  under a  Registration  Statement  until  such  Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement,  or until it is advised in writing (the "Advice") by the Company that
the use of the applicable  Prospectus  may be resumed,  and, in either case, has
received copies of any additional or supplemental  filings that are incorporated
or deemed to be  incorporated  by reference in such  Prospectus or  Registration
Statement.

      (d) Amendments and Waivers.  The provisions of this  Agreement,  including
the provisions of this sentence,  may not be amended,  modified or supplemented,
and waivers or  consents to  departures  from the  provisions  hereof may not be
given,  unless the same shall be in writing  and signed by the  Company and each
Holder  of the then  outstanding  Registrable  Securities.  Notwithstanding  the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates  exclusively to the rights of Holders and that does not
directly  or  indirectly  affect  the  rights of other  Holders  may be given by
Holders of all of the  Registrable  Securities  to which such  waiver or consent
relates;  provided,  however,  that the  provisions  of this sentence may not be
amended,  modified,  or supplemented except in accordance with the provisions of
the immediately preceding sentence.

      (e) Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder  shall be delivered as set forth
in the Modification Agreement.

      (f) Successors and Assigns.  This Agreement  shall inure to the benefit of
and be binding upon the successors and permitted  assigns of each of the parties
and shall  inure to the benefit of each  Holder.  The Company may not assign its
rights or obligations  hereunder without the prior written consent of all of the
Holders of the then-outstanding Registrable Securities. Upon any transfer of the
Registrable Securities or any portion thereof, the transferee of the Registrable
Securities shall be entitled to all rights and benefits provided  hereunder upon
acceptance of all obligations hereunder.


                                       8
<PAGE>

      (g)  No  Inconsistent  Agreements.  Neither  the  Company  nor  any of its
subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its  subsidiaries,  on or  after  the  date of this  Agreement,  enter  into any
agreement  with  respect  to its  securities,  that  would  have the  effect  of
impairing  the rights  granted to the  Holders in this  Agreement  or  otherwise
conflicts with the provisions hereof.

      (h)  Execution  and  Counterparts.  This  Agreement may be executed in any
number of counterparts,  each of which when so executed shall be deemed to be an
original  and, all of which taken  together  shall  constitute  one and the same
Agreement.   In  the  event  that  any   signature  is  delivered  by  facsimile
transmission,  such  signature  shall create a valid  binding  obligation of the
party  executing  (or on whose behalf such  signature is executed) the same with
the same  force and  effect as if such  facsimile  signature  were the  original
thereof.

      (i) Governing Law. All questions  concerning the  construction,  validity,
enforcement  and  interpretation  of this Agreement shall be determined with the
provisions of the Modification Agreement.

      (j) Severability.  If any term, provision, covenant or restriction of this
Agreement is held by a court of competent  jurisdiction to be invalid,  illegal,
void or  unenforceable,  the remainder of the terms,  provisions,  covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected,  impaired or  invalidated,  and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

      (k)  Headings.  The  headings in this  Agreement  are for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

      (l) Independent Nature of Holders' Obligations and Rights. The obligations
of each Holder  hereunder are several and not joint with the  obligations of any
other Holder  hereunder,  and no Holder shall be  responsible in any way for the
performance of the obligations of any other Holder hereunder.  Nothing contained
herein or in any other  agreement or document  delivered at any closing,  and no
action  taken by any  Holder  pursuant  hereto  or  thereto,  shall be deemed to
constitute the Holders as a partnership,  an association, a joint venture or any
other kind of entity,  or create a  presumption  that the Holders are in any way
acting  in  concert  with  respect  to  such  obligations  or  the  transactions
contemplated  by this  Agreement.  Each Holder  shall be entitled to protect and
enforce its rights,  including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose.

                              ********************


                                       9
<PAGE>


      IN WITNESS  WHEREOF,  the parties have executed this  Registration  Rights
Agreement as of the date first written above.


                                        THOMAS EQUIPMENT, INC.


                                       By:
                                           -------------------------------------
                                           Name:  David Marks
                                           Title: Chairman




                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                       10
<PAGE>


                     [PURCHASER'S SIGNATURE PAGE TO THM RRA]


Name of Investing Entity: ______________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________



                           [SIGNATURE PAGES CONTINUE]


                                       11
<PAGE>

                                     ANNEX A

                              Plan of Distribution

      Each Selling Stockholder (the "Selling  Stockholders") of the common stock
("Common  Stock")  of  Thomas  Equipment,  Inc.,  a  Delaware  corporation  (the
"Company") and any of their pledgees,  assignees and successors-in-interest may,
from  time to time,  sell  any or all of their  shares  of  Common  Stock on the
Trading Market or any other stock exchange,  market or trading facility on which
the shares are traded or in private transactions. These sales may be at fixed or
negotiated  prices.  A  Selling  Stockholder  may  use  any  one or  more of the
following methods when selling shares:

      o     ordinary  brokerage  transactions  and  transactions  in  which  the
            broker-dealer solicits purchasers;

      o     block  trades in which the  broker-dealer  will  attempt to sell the
            shares as agent but may  position  and resell a portion of the block
            as principal to facilitate the transaction;

      o     purchases  by  a  broker-dealer  as  principal  and  resale  by  the
            broker-dealer for its account;

      o     an  exchange  distribution  in  accordance  with  the  rules  of the
            applicable exchange;

      o     privately negotiated transactions;

      o     settlement  of  short  sales  entered  into  after  the date of this
            prospectus;

      o     broker-dealers  may agree with the  Selling  Stockholders  to sell a
            specified number of such shares at a stipulated price per share;

      o     a combination of any such methods of sale;

      o     through  the  writing or  settlement  of  options  or other  hedging
            transactions, whether through an options exchange or otherwise; or

      o     any other method permitted pursuant to applicable law.

      The Selling  Stockholders  may also sell  shares  under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available,  rather
than under this prospectus.

      Broker-dealers  engaged by the Selling  Stockholders may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling  Stockholders  (or, if any  broker-dealer  acts as
agent  for the  purchaser  of  shares,  from the  purchaser)  in  amounts  to be
negotiated.  Each  Selling  Stockholder  does not expect these  commissions  and
discounts  relating  to its sales of shares to exceed what is  customary  in the
types of transactions involved.


                                       12
<PAGE>

      In connection with the sale of our common stock or interests therein,  the
Selling  Stockholders may enter into hedging transactions with broker-dealers or
other  financial  institutions,  which may in turn  engage in short sales of the
common stock in the course of hedging the  positions  they  assume.  The Selling
Stockholders  may also sell shares of our common  stock short and deliver  these
securities  to close out their  short  positions,  or loan or pledge  the common
stock to  broker-dealers  that in turn may sell these  securities.  The  Selling
Stockholders   may  also  enter   into   option  or  other   transactions   with
broker-dealers  or other  financial  institutions or the creation of one or more
derivative  securities which require the delivery to such broker-dealer or other
financial  institution of shares offered by this  prospectus,  which shares such
broker-dealer  or  other  financial  institution  may  resell  pursuant  to this
prospectus (as supplemented or amended to reflect such transaction).

      The  Selling  Stockholders  and any  broker-dealers  or  agents  that  are
involved  in selling  the shares may be deemed to be  "underwriters"  within the
meaning of the Securities Act in connection with such sales. In such event,  any
commissions  received  by such  broker-dealers  or agents  and any profit on the
resale  of the  shares  purchased  by  them  may be  deemed  to be  underwriting
commissions or discounts under the Securities Act. Each Selling  Stockholder has
informed  the  Company  that it does not have any  agreement  or  understanding,
directly or indirectly, with any person to distribute the Common Stock.

      The Company is required to pay certain fees and  expenses  incurred by the
Company  incident to the  registration of the shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses,  claims,  damages and
liabilities, including liabilities under the Securities Act.

      Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities  Act, they will be subject to the prospectus  delivery
requirements of the Securities Act. In addition,  any securities covered by this
prospectus  which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather  than  under  this  prospectus.  Each  Selling
Stockholder  has  advised  us that they have not  entered  into any  agreements,
understandings or arrangements  with any underwriter or broker-dealer  regarding
the sale of the resale shares.  There is no underwriter or  coordinating  broker
acting in connection  with the proposed sale of the resale shares by the Selling
Stockholders.

      We agreed to keep this  prospectus  effective until the earlier of (i) the
date on which  the  shares  may be resold by the  Selling  Stockholders  without
registration  and  without  regard to any volume  limitations  by reason of Rule
144(e) under the  Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold  pursuant to the  prospectus  or Rule 144 under the
Securities  Act or any other rule of similar  effect.  The resale shares will be
sold only through  registered or licensed  brokers or dealers if required  under
applicable  state securities  laws. In addition,  in certain states,  the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable  state or an exemption  from the  registration  or  qualification
requirement is available and is complied with.

      Under applicable rules and regulations  under the Exchange Act, any person
engaged in the distribution of the resale shares may not  simultaneously  engage
in market making activities with respect to our common stock for a period of two
business days prior to the commencement of the  distribution.  In addition,  the
Selling  Stockholders  will be subject to applicable  provisions of the Exchange
Act and the rules and regulations thereunder,  including Regulation M, which may
limit the timing of  purchases  and sales of shares of our  common  stock by the
Selling Stockholders or any other person. We will make copies of this prospectus
available  to the Selling  Stockholders  and have  informed  them of the need to
deliver a copy of this  prospectus to each  purchaser at or prior to the time of
the sale.


                                       13
<PAGE>

                                                                        ANNEX B


                             THOMAS EQUIPMENT, INC.

                 SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

      The  undersigned  beneficial  owner of common stock,  par value $0.001 per
share (the "Common Stock"),  of Thomas Equipment,  Inc., a Delaware  corporation
(the "Company"), (the "Registrable Securities") understands that the Company has
filed or  intends  to file with the  Securities  and  Exchange  Commission  (the
"Commission")  a  registration   statement  on  Form  SB-2  (the   "Registration
Statement") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "Securities  Act"), of the Registrable  Securities,  in
accordance  with the terms of the  Registration  Rights  Agreement,  dated as of
April___, 2005 (the "Registration Rights Agreement"),  among the Company and the
Purchasers  named  therein.  A copy  of the  Registration  Rights  Agreement  is
available  from the Company  upon  request at the address set forth  below.  All
capitalized  terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

      Certain   legal   consequences   arise  from  being  named  as  a  selling
securityholder  in  the  Registration  Statement  and  the  related  prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel  regarding the consequences of being
named  or not  being  named  as a  selling  securityholder  in the  Registration
Statement and the related prospectus.

                                     NOTICE

      The  undersigned  beneficial  owner  (the  "Selling   Securityholder")  of
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise  specified under such Item 3)
in the Registration Statement.


                                       14
<PAGE>

The  undersigned  hereby  provides the following  information to the Company and
represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1.    NAME.

      (a)   Full Legal Name of Selling Securityholder

            --------------------------------------------------------------------

      (b)   Full Legal Name of Registered  Holder (if not the same as (a) above)
            through  which  Registrable  Securities  Listed  in Item 3 below are
            held:

            --------------------------------------------------------------------

      (c)   Full Legal Name of Natural  Control  Person  (which  means a natural
            person who directly you indirectly alone or with others has power to
            vote or dispose of the securities covered by the questionnaire):

            --------------------------------------------------------------------

2.    ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Telephone:
          ----------------------------------------------------------------------
Fax:
     ---------------------------------------------------------------------------
Contact Person:
                ----------------------------------------------------------------

3.    BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

      (a)   Type and Number of Registrable Securities beneficially owned:

            --------------------------------------------------------------------
            --------------------------------------------------------------------
            --------------------------------------------------------------------


                                       15
<PAGE>

4.    BROKER-DEALER STATUS:

      (a)   Are you a broker-dealer?

                              Yes |_|       No |_|

      Note: If yes,  the  Commission's  staff has  indicated  that you should be
            identified as an underwriter in the Registration Statement.

      (b)   Are you an affiliate of a broker-dealer?

                              Yes |_|       No |_|

      (c)   If you are an affiliate of a broker-dealer,  do you certify that you
            bought  the  Registrable   Securities  in  the  ordinary  course  of
            business,  and  at  the  time  of the  purchase  of the  Registrable
            Securities to be resold,  you had no  agreements or  understandings,
            directly  or   indirectly,   with  any  person  to  distribute   the
            Registrable Securities?

                              Yes |_|       No |_|

      Note: If no,  the  Commission's  staff has  indicated  that you  should be
            identified as an underwriter in the Registration Statement.

5.    BENEFICIAL  OWNERSHIP  OF OTHER  SECURITIES  OF THE  COMPANY  OWNED BY THE
      SELLING SECURITYHOLDER.

      Except  as set  forth  below in this  Item 5, the  undersigned  is not the
      beneficial or registered owner of any securities of the Company other than
      the Registrable Securities listed above in Item 3.

      (a)   Type  and  Amount  of  Other  Securities  beneficially  owned by the
            Selling Securityholder:

            --------------------------------------------------------------------
            --------------------------------------------------------------------
            --------------------------------------------------------------------


                                       16
<PAGE>

6.    RELATIONSHIPS WITH THE COMPANY:

      Except  as  set  forth  below,  neither  the  undersigned  nor  any of its
      affiliates,  officers, directors or principal equity holders (owners of 5%
      of more of the equity securities of the undersigned) has held any position
      or office or has had any other material  relationship with the Company (or
      its predecessors or affiliates) during the past three years.

      State any exceptions here:


            --------------------------------------------------------------------
            --------------------------------------------------------------------


      The undersigned  agrees to promptly notify the Company of any inaccuracies
or changes in the information  provided herein that may occur  subsequent to the
date hereof at any time while the Registration Statement remains effective.

      By signing  below,  the  undersigned  consents  to the  disclosure  of the
information  contained  herein  in its  answers  to  Items 1  through  6 and the
inclusion of such  information  in the  Registration  Statement  and the related
prospectus.  The undersigned  understands  that such  information will be relied
upon by the Company in  connection  with the  preparation  or  amendment  of the
Registration Statement and the related prospectus.

      IN WITNESS WHEREOF the  undersigned,  by authority duly given,  has caused
this Notice and  Questionnaire  to be executed and delivered either in person or
by its duly authorized agent.

Dated:                               Beneficial Owner:
       ----------------------                          -------------------------

                                     By:
                                         ---------------------------------------
                                         Name:
                                         Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED  NOTICE AND  QUESTIONNAIRE,  AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:


                                       17