AGREEMENT

      


      AGREEMENT,
        dated
        as of October 28,
        2005
        (the
        “Agreement”), by and among Thomas Equipment, Inc., a Delaware corporation
        (“Thomas Equipment”), Thomas Ventures, Inc., a Delaware corporation (“Thomas
        Ventures” and together with Thomas Equipment, each a “Company” and collectively
        the “Companies”) and Laurus Master Fund, Ltd. (“Laurus”).

       

      BACKGROUND

       

      Companies
        and Laurus are parties to a Security and Purchase Agreement dated as of November
        9, 2004 (as amended, restated, supplemented or otherwise modified from time
        to
        time, the “Security and Purchase Agreement”) pursuant to which Laurus provides
        Companies with certain financial accommodations.

       

      In
        connection with the Security and Purchase Agreement, Thomas Equipment and
        Laurus
        are parties to a Registration Rights Agreement dated as of November 9, 2004
        (as
        amended, restated, supplemented or otherwise modified from time to time,
        the
“Registration Rights Agreement) pursuant to which Thomas Equipment, among
        other
        things, has agreed to file a registration statement covering the Registrable
        Securities (as therein defined). Companies and Laurus believe that it would
        be
        in the best interests of the Companies and Laurus to terminate the Registration
        Rights Agreement in all respects as of the date hereof, and Laurus is willing
        to
        do so on the terms and conditions hereafter set forth.

       

      Also
        in
        connection with the Security and Purchase Agreement, Thomas Equipment executed
        (i) certain convertible term notes in the aggregate principal amount of
        $7,900,000 (the “Term Notes”) Laurus, (ii) a minimum borrowing note in the
        principal amount of $8,000,000 (the “MB Note”), (iii) certain revolving
        promissory notes in the maximum principal amount of $20,000,000 (the “Revolving
        Note” and collectively with the Term Notes and the Minimum Borrowing Notes, the
        “Notes”), (iv) warrants to purchase an aggregate of 2,750,000 shares of common
        stock of Thomas Equipment (the “Warrants”), and (v) an option to purchase an
        aggregate of 4,020,000 shares of common stock of Thomas Equipment (the
“Option”).

       

      The
        Companies and Laurus wish to amend certain terms of the Security and Purchase
        Agreement and the Notes related to interest rate adjustments, issuances of
        stock
        by Thomas Equipment below the conversion price of the Notes.

      


      Companies
        and Laurus wish to enter into certain agreements related to the Security
        and
        Purchase Agreement and the promissory notes, common stock purchase warrants
        and
        options and ancillary documents related thereto, which agreements shall be
        negotiated and executed by the parties subsequent to the date hereof (the
        “Definitive Agreement”).

      


      All
        capitalized terms not otherwise defined herein shall have the meanings given
        to
        them in the Security and Purchase Agreement.

       

      NOW
        THEREFORE in
        consideration of the premises and the mutual covenants, agreements,
        representations and warranties contained herein, and other good and valuable
        consideration, the receipt and sufficiency of which is hereby acknowledged,
        the
        parties hereto hereby agree as follows:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        ARTICLE
          1. 

        THE
          AGREEMENTS

      

       

      


      1.1 
        Agreements.
        Subject
        to the terms and conditions set forth in this Agreement and subject to the
        negotiation and execution of the Definitive Agreement, the Companies and
        Laurus
        hereby agree to execute the Definitive Agreement containing the following
        provisions which shall be effective as of the date hereof:

      


      (a)
        Companies and Laurus hereby agree that the Registration Rights Agreement
        is
        terminated in its entirety, effective as of the date hereof. Companies and
        Laurus further agree that neither party shall have any rights or obligations
        with regard to the matters contained in the Registration Rights Agreement,
        including but not limited to the continuing payment of liquidated damages,
        if
        any, to Laurus. Laurus acknowledges that the registration currently on file
        with
        the Securities and Exchange Commission which seeks to register the resale
        of
        securities on behalf of Laurus shall be amended to delete the registration
        of
        all such securities. Each of the Security and Purchase Agreement, Notes,
        Warrants and Options shall be amended to remove reference to the Registration
        Rights Agreement.

       

      (b)
        Section 1.2 of the Notes shall be amended to remove all adjustments related
        to a
        decrease in the Contract Rate as a result of the Market Price of the Common
        Stock.

       

      (c)
        Section 2.2 of the Term Note and Section 2.3 of the Minimum Borrowing Note
        shall
        be removed in their entirety.

       

      (d)
        Section 3.5 of the Term Note and the Minimum Borrowing Note shall be amended
        to
        remove provisions adjusting the Fixed Conversion Price to a subsequent lower
        Offer Price and add traditional value weighted anti-dilution
        provisions.

       

      1.2 
        Consideration.
        In
        consideration of Laurus’ agreements contained herein, Thomas Equipment agrees to
        pay Laurus on the date hereof the sum of $600,000 in full and final payment
        of
        all monies due or which may become due to Laurus pursuant to the Registration
        Rights Agreement.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      ARTICLE
        2.

      GENERAL
        PROVISIONS

       

      2.1 
        Specific
        Performance. The
        parties hereto acknowledge and agree that the breach of this Agreement would
        cause irreparable damage to the non-breaching parties and that the non-breaching
        parties will not have an adequate remedy at law. Therefore, the obligations
        of
        each of the parties under this Agreement, shall be enforceable by a decree
        of
        specific performance issued by any court of competent jurisdiction, and
        appropriate injunctive relief may be applied for and granted in connection
        therewith. Such remedies shall, however, be cumulative and not exclusive
        and
        shall be in addition to any other remedies which any party may have under
        this
        Agreement or otherwise.

       

      2.2 
        Further
        Assurances. The
        parties hereto each agree to execute and deliver such other documents or
        agreements and to take such other action as may be reasonably necessary or
        desirable for the implementation of this Agreement and the consummation of
        the
        transactions contemplated hereby.

       

      2.3 
        Governing
        Law.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of New York.

       

      2.4 
        Headings. Section
        headings of this Agreement are for reference purposes only and are to be
        given
        no effect in the construction or interpretation of this Agreement.

       

      2.5 
        Binding
        Effect. This
        Agreement is irrevocable and shall be binding upon and inure to the benefit
        of
        the parties and their respective successors and permitted assigns. 

       

      2.6 
        Counterparts.
        This
        Agreement may be executed in counterparts, each of which when executed by
        any
        party will be deemed to be an original and all of which counterparts will
        together constitute one and the same Agreement. Delivery of executed copies
        of
        this Agreement by telecopier will constitute proper delivery, provided that
        originally executed counterparts are delivered to the parties within a
        reasonable time thereafter.

       

      


      [Remainder
        of page intentionally left blank.]

      


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, this Amendment has been duly executed as of the day and
        year
        first written above.

      
        	 	 	 
	 	THOMAS
                EQUIPMENT, INC.
	 
 	 
 	 
 
	 	By:  	/s/ DAVID
                MARKS
	 	
                

              
	 	
                Name:
                  David Marks

                Title: Chairman

              


      

       

      
        	 	 	 
	 	THOMAS
                VENTURES, INC.
	 
 	 
 	 
 
	 	By:  	/s/ DAVID
                MARKS
	 	
                

              
	 	
                Name:
                  David Marks

                Title: Chairman

              


      

       

      
        	 	 	 
	 	LAURUS
                MASTER FUND, LTD.
	 
 	 
 	 
 
	 	By:  	/s/ DAVID
                GRIN
	 	
                

              
	 	
                Name:
                  David Grin

                Title: Fund
                  Manager

              


      

       

       

      
        
          	 	 	 
	 	CONSENTED AND AGREED TO:
	 	 
	 	THOMAS
                  EQUIPMENT 2004 INC.
	 
 	 
 	 
 
	 	By:  	/s/ DAVID
                  MARKS
	 	
                  

                
	 	
                  Name:
                    David Marks

                  Title:
                    Chairman

                


        



       

      
        	 	 	 
	 	PNEUTECH
                INC.
	 
 	 
 	 
 
	 	By:  	/s/ DAVID
                MARKS
	 	
                

              
	 	
                Name:
                  David Marks

                Title:
                  Chairman

              


      

       

      [Additional
        Signature Page to Follow]

      
         

        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

        

      

       

      
        	 	 	 
	 	ROUSSEAU
                CONTROLS INC.
	 
 	 
 	 
 
	 	By:  	/s/ DAVID
                MARKS 
	 	
                

              
	 	
                Name:
                  David Marks

                Title:
                  Chairman

              


      

       

      
        	 	 	 
	 	HYDRAMAN
                FLUID POWER LIMITED
	 
 	 
 	 
 
	 	By:  	/s/ DAVID
                MARKS
	 	
                

              
	 	
                Name:
                  David Marks

                Title:
                  Chairman

              


      

      


       

      
        
          
          

        

        
          5