Document:

THIS
      WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
      STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
      OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
      IN
      THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
      SAID
      ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO THOMAS EQUIPMENT, INC. THAT SUCH REGISTRATION IS NOT
      REQUIRED.

     

    Right
      to
      Purchase up to 844,497,199 Shares of Common Stock of

    Thomas
      Equipment, Inc.

    (subject
      to adjustment as provided herein)

     

    COMMON
      STOCK PURCHASE WARRANT

     

    
      	No. L-8	 	
              Issue
                Date: July 27,
                2007

            

    

     

    THOMAS
      EQUIPMENT, INC., a corporation organized under the laws of the State of Delaware
      (“Company”), hereby certifies that, for value received, LAURUS MASTER FUND,
      LTD., or assigns (the “Holder”), is entitled, subject to the terms set forth
      below, to purchase from the Company (as defined herein) from and after the
      Issue
      Date of this Warrant and at any time or from time to time before 5:00 p.m.,
      New
      York time, through the close of business July 27, 2017 (the “Expiration Date”),
      up to 844,497,199 fully paid and nonassessable shares of Common Stock (as
      hereinafter defined), $0.01 par value per share, at the applicable Exercise
      Price per share (as defined below). The number and character of such shares
      of
      Common Stock and the applicable Exercise Price per share are subject to
      adjustment as provided herein.

     

    As
      used
      herein the following terms, unless the context otherwise requires, have the
      following respective meanings: 

     

    (a)  The
      term
“Company” shall include Thomas Equipment, Inc. and any corporation which shall
      succeed, or assume the obligations of, Thomas Equipment, Inc. hereunder.

     

    (b)  The
      term
“Common Stock” includes (i) the Company’s Common Stock, par value $0.01 per
      share; and (ii) any other securities into which or for which any of the
      securities described in (a) may be converted or exchanged pursuant to a plan
      of
      recapitalization, reorganization, merger, sale of assets or
      otherwise.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  The
      term
“Other Securities” refers to any stock (other than Common Stock) and other
      securities of the Company or any other person (corporate or otherwise) which
      the
      Holder of this Warrant at any time shall be entitled to receive, or shall have
      received, on the exercise of this Warrant, in lieu of or in addition to Common
      Stock, or which at any time shall be issuable or shall have been issued in
      exchange for or in replacement of Common Stock or Other Securities pursuant
      to
      Section 4 or otherwise.

     

    (d)  The
      “Exercise Price” applicable under this Warrant shall be a price of $0.01 per
      share.

     

    1.  Exercise
      of Warrant.
      

     

    1.1  Number
      of Shares Issuable upon Exercise.
      From
      and after the date hereof through and including the Expiration Date, the Holder
      shall be entitled to receive, upon exercise of this Warrant in whole or in
      part,
      by delivery of an original or fax copy of an exercise notice in the form
      attached hereto as Exhibit A (the “Exercise Notice”), shares of Common Stock of
      the Company, subject to adjustment pursuant to Section 4. Notwithstanding
      anything contained herein to the contrary, the Holder shall not be entitled
      to
      exercise pursuant to the terms of this Warrant an amount that would be
      convertible into that number of shares of Common Stock which would exceed the
      difference between the number of shares of Common Stock beneficially owned
      by
      the Holder or issuable upon exercise of the option held by the Holder and 9.99%
      of the outstanding shares of Common Stock of the Company. For the purposes
      of
      the immediately preceding sentence, beneficial ownership shall be determined
      in
      accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
      thereunder. The limitation described in this Section 1.1 shall automatically
      become null and void without any notice to the Company upon the occurrence
      and
      during the continuance beyond any applicable grace period of an Event of Default
      under and as defined in that certain Security and Purchase Agreement dated
      as of
      the date hereof among the Holder, the Company and Thomas Ventures, Inc., or
      upon
      65 days prior notice to the Company.

     

    1.2  Fair
      Market Value.
      For
      purposes hereof, the “Fair Market Value” of a share of Common Stock as of a
      particular date (the “Determination Date”) shall mean: 

     

    (a)  If
      the
      Company’s Common Stock is traded on the American Stock Exchange or another
      national exchange or is quoted on the National or SmallCap Market of The Nasdaq
      Stock Market, Inc.(“Nasdaq”), then the closing or last sale price, respectively,
      reported for the last business day immediately preceding the Determination
      Date.

     

    (b)  If
      the
      Company’s Common Stock is not traded on the American Stock Exchange or another
      national exchange or on the Nasdaq but is traded on the NASD OTC Bulletin Board,
      then the mean of the average of the closing bid and asked prices reported for
      the last business day immediately preceding the Determination Date.

     

    (c)  Except
      as
      provided in clause (d) below, if the Company’s Common Stock is not publicly
      traded, then as the Holder and the Company agree or in the absence of agreement
      by arbitration in accordance with the rules then in effect of the American
      Arbitration Association, before a single arbitrator to be chosen from a panel
      of
      persons qualified by education and training to pass on the matter to be
      decided.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (d)  If
      the
      Determination Date is the date of a liquidation, dissolution or winding up,
      or
      any event deemed to be a liquidation, dissolution or winding up pursuant to
      the
      Company’s charter, then all amounts to be payable per share to holders of the
      Common Stock pursuant to the charter in the event of such liquidation,
      dissolution or winding up, plus all other amounts to be payable per share in
      respect of the Common Stock in liquidation under the charter, assuming for
      the
      purposes of this clause (d) that all of the shares of Common Stock then issuable
      upon exercise of this Warrant are outstanding at the Determination
      Date.

     

    1.3  Company
      Acknowledgment.
      The
      Company will, at the time of the exercise of this Warrant, upon the request
      of
      the Holder acknowledge in writing its continuing obligation to afford to the
      Holder any rights to which the Holder shall continue to be entitled after such
      exercise in accordance with the provisions of this Warrant. If the Holder shall
      fail to make any such request, such failure shall not affect the continuing
      obligation of the Company to afford to the Holder any such rights. 

     

    1.4  Trustee
      for Warrant Holders.
      In the
      event that a bank or trust company shall have been appointed as trustee for
      the
      Holder pursuant to Subsection 3.2, such bank or trust company shall have all
      the
      powers and duties of a warrant agent (as hereinafter described) and shall
      accept, in its own name for the account of the Company or such successor person
      as may be entitled thereto, all amounts otherwise payable to the Company or
      such
      successor, as the case may be, on exercise of this Warrant pursuant to this
      Section 1.

     

    2.  Procedure
      for Exercise.

     

    2.1  Delivery
      of Stock Certificates, Etc., on Exercise.
      The
      Company agrees that the shares of Common Stock purchased upon exercise of this
      Warrant shall be deemed to be issued to the Holder as the record owner of such
      shares as of the close of business on the date on which this Warrant shall
      have
      been surrendered and payment made for such shares in accordance herewith. As
      soon as practicable after the exercise of this Warrant in full or in part,
      and
      in any event within three (3) business days thereafter, the Company at its
      expense (including the payment by it of any applicable issue taxes) will cause
      to be issued in the name of and delivered to the Holder, or as the Holder (upon
      payment by the Holder of any applicable transfer taxes) may direct in compliance
      with applicable securities laws, a certificate or certificates for the number
      of
      duly and validly issued, fully paid and nonassessable shares of Common Stock
      (or
      Other Securities) to which the Holder shall be entitled on such exercise, plus,
      in lieu of any fractional share to which the Holder would otherwise be entitled,
      cash equal to such fraction multiplied by the then Fair Market Value of one
      full
      share, together with any other stock or other securities and property (including
      cash, where applicable) to which the Holder is entitled upon such exercise
      pursuant to Section 1 or otherwise.

     

    2.2  Exercise.
      If the
      Fair Market Value of one share of Common Stock is greater than the Exercise
      Price (at the date of calculation as set forth below), the Holder shall receive
      shares equal to the value (as determined below) of this Warrant (or the portion
      thereof being exercised) by surrender of this Warrant at the principal office
      of
      the Company together with the properly endorsed Exercise Notice in which event
      the Company shall issue to the Holder a number of shares of Common Stock
      computed using the following formula:

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
      
 

    

    
      
        
          	
                  X=Y  (A-B)

                           
A

                	 	 
	 	 	 
	
                  Where
                    X =

                	 	
                  the
                    number of shares of Common Stock to be issued to the
                    Holder

                
	 	 	 
	
                  Y
                    =

                	 	
                  the
                    number of shares of Common Stock purchasable under this Warrant
                    or, if
                    only a portion of this Warrant is being exercised, the portion
                    of this
                    Warrant being exercised (at the date of such
                    calculation)

                
	 	 	 
	
                  A
                    =

                	 	
                  the
                    Fair Market Value of one share of the Company’s Common Stock (at the date
                    of such calculation)

                
	 	 	 
	
                  B
                    =

                	 	
                  Exercise
                    Price (as adjusted to the date of such
                    calculation)

                

        

         

      

    

    3.  Effect
      of Reorganization, Etc.; Adjustment of Exercise Price.

     

    3.1  Reorganization,
      Consolidation, Merger, Etc.
      In case
      at any time or from time to time, the Company shall (a) effect a reorganization,
      (b) consolidate with or merge into any other person, or (c) transfer all or
      substantially all of its properties or assets to any other person under any
      plan
      or arrangement contemplating the dissolution of the Company, then, in each
      such
      case, as a condition to the consummation of such a transaction, proper and
      adequate provision shall be made by the Company whereby the Holder of this
      Warrant, on the exercise hereof as provided in Section 1 at any time after
      the
      consummation of such reorganization, consolidation or merger or the effective
      date of such dissolution, as the case may be, shall receive, in lieu of the
      Common Stock (or Other Securities) issuable on such exercise prior to such
      consummation or such effective date, the stock and other securities and property
      (including cash) to which the Holder would have been entitled upon such
      consummation or in connection with such dissolution, as the case may be, if
      the
      Holder had so exercised this Warrant, immediately prior thereto, all subject
      to
      further adjustment thereafter as provided in Section 4.

     

    3.2  Dissolution.
      In the
      event of any dissolution of the Company following the transfer of all or
      substantially all of its properties or assets, the Company, concurrently with
      any distributions made to holders of its Common Stock, shall at its expense
      deliver or cause to be delivered to the Holder the stock and other securities
      and property (including cash, where applicable) receivable by the Holder of
      this
      Warrant pursuant to Section 3.1, or, if the Holder shall so instruct the
      Company, to a bank or trust company specified by the Holder and having its
      principal office in New York, NY as trustee for the Holder of this Warrant
      (the
“Trustee”).

     

    3.3  Continuation
      of Terms.
      Upon
      any reorganization, consolidation, merger or transfer (and any dissolution
      following any transfer) referred to in this Section 3, this Warrant shall
      continue in full force and effect and the terms hereof shall be applicable
      to
      the shares of stock and other securities and property receivable on the exercise
      of this Warrant after the consummation of such reorganization, consolidation
      or
      merger or the effective date of dissolution following any such transfer, as
      the
      case may be, and shall be binding upon the issuer of any such stock or other
      securities, including, in the case of any such transfer, the person acquiring
      all or substantially all of the properties or assets of the Company, whether
      or
      not such person shall have expressly assumed the terms of this Warrant as
      provided in Section 4. In the event this Warrant does not continue in full
      force
      and effect after the consummation of the transactions described in this Section
      3, then the Company’s securities and property (including cash, where applicable)
      receivable by the Holder of this Warrant will be delivered to the Holder or
      the
      Trustee as contemplated by Section 3.2.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    4.  Extraordinary
      Events Regarding Common Stock.
      In the
      event that the Company shall (a) issue additional shares of the Common Stock
      as
      a dividend or other distribution on outstanding Common Stock, (b) subdivide
      its
      outstanding shares of Common Stock, or (c) combine its outstanding shares of
      the
      Common Stock into a smaller number of shares of the Common Stock, then, in
      each
      such event, the Exercise Price shall, simultaneously with the happening of
      such
      event, be adjusted by multiplying the then Exercise Price by a fraction, the
      numerator of which shall be the number of shares of Common Stock outstanding
      immediately prior to such event and the denominator of which shall be the number
      of shares of Common Stock outstanding immediately after such event, and the
      product so obtained shall thereafter be the Exercise Price then in effect.
      The
      Exercise Price, as so adjusted, shall be readjusted in the same manner upon
      the
      happening of any successive event or events described herein in this Section
      4.
      The number of shares of Common Stock that the Holder of this Warrant shall
      thereafter, on the exercise hereof as provided in Section 1, be entitled to
      receive shall be increased to a number determined by multiplying the number
      of
      shares of Common Stock that would otherwise (but for the provisions of this
      Section 4) be issuable on such exercise by a fraction of which (a) the numerator
      is the Exercise Price that would otherwise (but for the provisions of this
      Section 4) be in effect, and (b) the denominator is the Exercise Price in effect
      on the date of such exercise.

     

    5.  Certificate
      as to Adjustments.
      In each
      case of any adjustment or readjustment in the shares of Common Stock (or Other
      Securities) issuable on the exercise of this Warrant, the Company at its expense
      will promptly cause its Chief Financial Officer or other appropriate designee
      to
      compute such adjustment or readjustment in accordance with the terms of this
      Warrant and prepare a certificate setting forth such adjustment or readjustment
      and showing in detail the facts upon which such adjustment or readjustment
      is
      based, including a statement of (a) the consideration received or receivable
      by
      the Company for any additional shares of Common Stock (or Other Securities)
      issued or sold or deemed to have been issued or sold, (b) the number of shares
      of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
      and (c) the Exercise Price and the number of shares of Common Stock to be
      received upon exercise of this Warrant, in effect immediately prior to such
      adjustment or readjustment and as adjusted or readjusted as provided in this
      Warrant. The Company will forthwith mail a copy of each such certificate to
      the
      Holder of this Warrant and any Warrant agent of the Company (appointed pursuant
      to Section 9 hereof).

     

    6.  Reservation
      of Stock, Etc., Issuable on Exercise of Warrant.
      The
      Company will at all times reserve and keep available, solely for issuance and
      delivery on the exercise of this Warrant, shares of Common Stock (or Other
      Securities) from time to time issuable on the exercise of this
      Warrant.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    7.  Assignment;
      Exchange of Warrant.
      Subject
      to compliance with applicable securities laws, this Warrant, and the rights
      evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”) in whole or in part. On the surrender for exchange of this
      Warrant, with the Transferor’s endorsement in the form of Exhibit B attached
      hereto (the “Transferor Endorsement Form”) and together with evidence reasonably
      satisfactory to the Company demonstrating compliance with applicable securities
      laws, which shall include, without limitation, the provision of a legal opinion
      from the Transferor’s counsel (at the Company’s expense) that such transfer is
      exempt from the registration requirements of applicable securities laws, and
      with payment by the Transferor of any applicable transfer taxes) will issue
      and
      deliver to or on the order of the Transferor thereof a new Warrant of like
      tenor, in the name of the Transferor and/or the transferee(s) specified in
      such
      Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on
      the face or faces thereof for the number of shares of Common Stock called for
      on
      the face or faces of this Warrant so surrendered by the Transferor.

     

    8.  Replacement
      of Warrant.
      On
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant and, in the case of any such loss,
      theft or destruction of this Warrant, on delivery of an indemnity agreement
      or
      security reasonably satisfactory in form and amount to the Company or, in the
      case of any such mutilation, on surrender and cancellation of this Warrant,
      the
      Company at its expense will execute and deliver, in lieu thereof, a new Warrant
      of like tenor.

     

    9.  Warrant
      Agent.
      The
      Company may, by written notice to the Holder of this Warrant, appoint an agent
      for the purpose of issuing Common Stock (or Other Securities) on the exercise
      of
      this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section
      7, and replacing this Warrant pursuant to Section 8, or any of the foregoing,
      and thereafter any such issuance, exchange or replacement, as the case may
      be,
      shall be made at such office by such agent.

     

    10.  Transfer
      on the Company’s Books.
      Until
      this Warrant is transferred on the books of the Company, the Company may treat
      the registered holder hereof as the absolute owner hereof for all purposes,
      notwithstanding any notice to the contrary.

     

    11.  Notices,
      Etc.
      All
      notices and other communications from the Company to the Holder of this Warrant
      shall be mailed by first class registered or certified mail, postage prepaid,
      at
      such address as may have been furnished to the Company in writing by the Holder
      or, until any Holder furnishes to the Company an address, then to, and at the
      address of, the last Holder of this Warrant who has so furnished an address
      to
      the Company.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    12.  Miscellaneous.
      This
      Warrant and any term hereof may be changed, waived, discharged or terminated
      only by an instrument in writing signed by the party against which enforcement
      of such change, waiver, discharge or termination is sought. This Warrant shall
      be governed by and construed in accordance with the laws of State of New York
      without regard to principles of conflicts of laws. Any action brought concerning
      the transactions contemplated by this Warrant shall be brought only in the
      state
      courts of New York or in the federal courts located in the state of New York;
      provided, however, that the Holder may choose to waive this provision and bring
      an action outside the state of New York. The individuals executing this Warrant
      on behalf of the Company agree to submit to the jurisdiction of such courts
      and
      waive trial by jury. The prevailing party shall be entitled to recover from
      the
      other party its reasonable attorney’s fees and costs. In the event that any
      provision of this Warrant is invalid or unenforceable under any applicable
      statute or rule of law, then such provision shall be deemed inoperative to
      the
      extent that it may conflict therewith and shall be deemed modified to conform
      with such statute or rule of law. Any such provision which may prove invalid
      or
      unenforceable under any law shall not affect the validity or enforceability
      of
      any other provision of this Warrant. The headings in this Warrant are for
      purposes of reference only, and shall not limit or otherwise affect any of
      the
      terms hereof. The invalidity or unenforceability of any provision hereof shall
      in no way affect the validity or enforceability of any other provision hereof.
      The Company acknowledges that legal counsel participated in the preparation
      of
      this Warrant and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Warrant to favor any party against the other
      party.

     

    [BALANCE
      OF PAGE INTENTIONALLY LEFT BLANK;

     

    SIGNATURE
      PAGE FOLLOWS]

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

     

    IN
      WITNESS WHEREOF, the Company has executed this Common Stock Purchase Warrant
      as
      of the date first written above. 

     

    
      	 	 	 
	 	THOMAS
              EQUIPMENT, INC.
	 
 	 
 	 
 
	 	 	/s/ MICHAEL
              S. LUTHER
	 	
              
Michael
              S. Luther,
	 	Chief
              Executive Officer

    

     

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    EXHIBIT
      A

     

    FORM
      OF SUBSCRIPTION

    (To
      Be
      Signed Only On Exercise Of Warrant)

     

    
      	
              TO:

            	
              Thomas
                Equipment, Inc.

            

      	 	
              1475
                32nd Avenue

              Lachine,
                Quebec H8T 3J1, Canada

              Attention:
Luigi
                LoBasso

            

    

     

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant (No.
      L-8), hereby irrevocably elects to purchase the maximum number of shares of
      Common Stock covered by such Warrant pursuant to the procedure set forth in
      Section 2.

     

    The
      undersigned herewith makes payment of the full Exercise Price for such shares
      at
      the price per share provided for in such Warrant, which is $___________. Such
      payment takes the form of (check applicable box or boxes):

     

    
      	________	
              the
                cancellation of such portion of the attached Warrant as is exercisable
                for
                a total of _______ shares of Common Stock (using a Fair Market Value
                of
                $_______ per share for purposes of this calculation);
                and/or

            

    

     

    
      	________	
              the
                cancellation of such number of shares of Common Stock as is necessary,
                in
                accordance with the formula set forth in Section 2, to exercise this
                Warrant with respect to the maximum number of shares of Common Stock
                purchasable pursuant to the procedure set forth in Section
                2.

            

    

     

    The
      undersigned requests that the certificates for such shares be issued in the
      name
      of, and delivered to ____________________________________________ whose address
      is ___________________________________________________________.

     

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable upon exercise of the within Warrant shall be made
      pursuant to registration of the Common Stock under the Securities Act of 1933,
      as amended (the “Securities Act”) or pursuant to an exemption from registration
      under the Securities Act.

     

     

    
      	
              Dated:

            	
              _____________________

            	
              _______________________________________________________________

            
	 	 	
              (Signature
                must conform to name of holder as specified on the face of the
                Warrant)

            
	 	 	 	 
	 	 	
              Address:

            	
              ________________________________________

            
	 	 	 	
              ________________________________________

            

    

     

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    EXHIBIT
      B

     

    FORM
      OF TRANSFEROR ENDORSEMENT

    (To
      Be
      Signed Only On Transfer Of Warrant)

     

    For
      value
      received, the undersigned hereby sells, assigns, and transfers unto the
      person(s) named below under the heading “Transferees” the right represented by
      the within Warrant to purchase the percentage and number of shares of Common
      Stock of Thomas Equipment, Inc. into which the within Warrant relates specified
      under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
      person Attorney to transfer its respective right on the books of Thomas
      Equipment, Inc. with full power of substitution in the premises.

     

    
      
        	
                Transferees

              	 	
                Address

              	 	
                Percentage
                  

                Transferred

              	 	
                Number

                Transferred

              
	 	 	 	 	 	 	 
	  	 	  	 	  	 	  
	 	 	 	 	 	 	 
	  	 	  	 	  	 	  
	 	 	 	 	 	 	 
	  	 	  	 	  	 	  
	 	 	 	 	 	 	 
	  	 	  	 	  	 	 
                

      

    

     

     

    
      	
              Dated

            	
              __________________________

            	
              ______________________________________________________________

            
	 	 	
              (Signature
                must conform to name of holder as specified on the face of the
                Warrant)

            
	 	 	 	 
	 	 	
              Address:

            	
              ___________________________________________

            
	 	 	 	
              ___________________________________________

            
	 	 	 
	 	 	 
	 	 	
              SIGNED
                IN THE PRESENCE OF:

            
	 	 	
              ______________________________________________________________

            
	 	 	
                                                                        
                (Name)

            

    

     

    ACCEPTED
      AND AGREED:

     

    [TRANSFEREE]

     

     

    _____________________________

                         
      (Name)

     

     

     

    
      
         

      

      
        10REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (this “Agreement”) is made and entered into as of
      July 27, 2007, by and between Thomas Equipment, Inc., a Delaware corporation
      (the “Company”), and Laurus Master Fund, Ltd. (“Laurus”).

     

    This
      Agreement is made in connection with the transactions contemplated by a Secured
      Term Note, dated as of the date hereof, in the original principal amount of
      $20,800,000, made by the Company and Thomas Ventures, Inc., a Delaware
      corporation in favor of Laurus. 

     

    The
      Company and Laurus hereby agree as follows:

     

    1.       Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Note shall have the meanings given such terms in the Note. As used in this
      Agreement, the following terms shall have the following meanings:

     

    “Commission”
      means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
      means
      shares of the Company’s common stock, par value $0.01 per share.

     

    “Effectiveness
      Date”
      means,
      (i) with respect to the Registration Statement required to be filed in
      connection with the shares of Common Stock issuable upon exercise of the
      Warrants issued on the date hereof, June 30, 2008 and (ii) with respect to
      each
      additional Registration Statement required to be filed hereunder (if any),
      a
      date no later than thirty (30) days following the applicable Filing
      Date.

     

    “Effectiveness
      Period”
      has the
      meaning set forth in Section 2(a).

     

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended, and any successor
      statute.

     

    “Filing
      Date”
      means,
      with respect to (1) the Registration Statement required to be filed in
      connection with the shares of Common Stock issuable to the Holder upon exercise
      of a Warrant, March 31, 2008, and (2) the Registration Statement required to
      be
      filed in connection with the shares of Common Stock issuable to the Holder
      as a
      result of adjustments to the Exercise Price made pursuant to Section 4 of the
      Warrant or otherwise, thirty (30) days after the occurrence of such event or
      the
      date of the adjustment of the Exercise Price.

     

    “Holder”
      or
“Holders”
      means
      Laurus or any of its affiliates or transferees to the extent any of them hold
      Registrable Securities, other then those purchasing Registrable Securities
      in a
      market transaction.

     

    “Indemnified
      Party”
      has the
      meaning set forth in Section 5(c).

     

    “Indemnifying
      Party”
      has the
      meaning set forth in Section 5(c).

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “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 such 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
      the shares of Common Stock issuable upon exercise of the Warrants.

     

    “Registration
      Statement”
      means
      each registration statement required to be filed hereunder, including the
      Prospectus therein, 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
      144”
      means
      Rule 144 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 effect as
      such
      Rule.

     

    “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 effect as
      such
      Rule.

     

    “Securities
      Act”
      means
      the Securities Act of 1933, as amended, and any successor statute.

     

    “Trading
      Market”
      means
      any of the NASD Over The Counter Bulletin Board, NASDAQ Capital Market, the
      NASDAQ National Markets System, the American Stock Exchange or the New York
      Stock Exchange

     

    “Warrants”
      means
      the Common Stock purchase warrants issued in connection with the Note, whether
      on the date thereof or thereafter.

     

    2.       Registration.

     

    (a)       On
      or prior to each Filing Date, the Company shall prepare and file with the
      Commission a Registration Statement covering the Registrable Securities for
      a
      selling stockholder resale offering to be made on a continuous basis pursuant
      to
      Rule 415. Each 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). The Company shall cause each Registration
      Statement to become effective and remain effective as provided herein. The
      Company shall use its best efforts to cause each Registration Statement to
      be
      declared effective under the Securities Act as promptly as possible after the
      filing thereof, but in any event no later than the Effectiveness Date. The
      Company shall use its reasonable commercial efforts to keep each Registration
      Statement continuously effective under the Securities Act until the date which
      is the earlier date of when (i) all Registrable Securities covered by such
      Registration Statement have been sold or (ii) all Registrable Securities covered
      by such Registration Statement may be sold immediately without registration
      under the Securities Act and 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 (each, an “Effectiveness
      Period”).

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b)       If:
      (i) the Registration Statement is not filed on or prior to the Filing Date;
      (ii)
      the Registration Statement is not declared effective by the Commission by the
      Effectiveness Date; (iii) after the Registration Statement is filed with and
      declared effective by the Commission, the Registration Statement ceases to
      be
      effective (by suspension or otherwise) as to all Registrable Securities to
      which
      it is required to relate at any time prior to the expiration of the
      Effectiveness Period (without being succeeded immediately by an additional
      registration statement filed and declared effective) for a period of time which
      shall exceed 30 days in the aggregate per year or more than 20 consecutive
      calendar days (defined as a period of 365 days commencing on the date the
      Registration Statement is declared effective); or (iv) the Common Stock is
      not
      listed or quoted, or is suspended from trading on any Trading Market for a
      period of three (3) consecutive Trading Days (provided the Company shall not
      have been able to cure such trading suspension within 30 days of the notice
      thereof or list the Common Stock on another Trading Market); (any such failure
      or breach being referred to as an “Event,” and for purposes of clause (i) or
      (ii) the date on which such Event occurs, or for purposes of clause (iii) the
      date which such 30 day or 20 consecutive day period (as the case may be) is
      exceeded, or for purposes of clause (iv) the date on which such three (3)
      Trading Day period is exceeded, being referred to as “Event Date”), then until
      the applicable Event is cured, the Company shall pay to each Holder an amount
      in
      cash, as liquidated damages and not as a penalty, equal to 1.0% for each thirty
      (30) day period (prorated for partial periods) on a daily basis of the original
      principal amount of the Note; provided that, the maximum aggregate amount of
      liquidated damages that may be charged to the Company pursuant to this Section
      2(b) shall not exceed 10% of the initial Principal Amount of the Note. While
      such Event continues, such liquidated damages shall be paid not less often
      than
      each thirty (30) days. Any unpaid liquidated damages as of the date when an
      Event has been cured by the Company shall be paid within three (3) days
      following the date on which such Event has been cured by the
      Company.

     

    (c)       Within
      three business days of the Effectiveness Date, the Company shall cause its
      counsel to issue a blanket opinion in the form attached hereto as Exhibit A,
      to
      the transfer agent stating that the shares are subject to an effective
      registration statement and can be reissued free of restrictive legend upon
      notice of a sale by Laurus and confirmation by Laurus that it has complied
      with
      the prospectus delivery requirements, provided that the Company has not advised
      the transfer agent orally or in writing that the opinion has been withdrawn.
      Copies of the blanket opinion required by this Section 2(c) shall be delivered
      to Laurus within the time frame set forth above.

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    3.       Registration
      Procedures.
      If and
      whenever the Company is required by the provisions hereof to effect the
      registration of any Registrable Securities under the Securities Act, the Company
      will, as expeditiously as possible:

     

    (a)       prepare
      and file with the Commission a Registration Statement with respect to such
      Registrable Securities, respond as promptly as possible to any comments received
      from the Commission, and use its best efforts to cause such Registration
      Statement to become and remain effective for the Effectiveness Period with
      respect thereto, and promptly provide to Laurus copies of all filings and
      Commission letters of comment relating thereto;

     

    (b)       prepare
      and file with the Commission such amendments and supplements to such
      Registration Statement and the Prospectus used in connection therewith as may
      be
      necessary to comply with the provisions of the Securities Act with respect
      to
      the disposition of all Registrable Securities covered by such Registration
      Statement and to keep such Registration Statement effective until the expiration
      of the Effectiveness Period applicable to such Registration
      Statement;

     

    (c)       furnish
      to Laurus such number of copies of the Registration Statement and the Prospectus
      included therein (including each preliminary Prospectus) as Laurus reasonably
      may request to facilitate the public sale or disposition of the Registrable
      Securities covered by such Registration Statement;

     

    (d)       use
      its best efforts to register or qualify Laurus’s Registrable Securities covered
      by such Registration Statement under the securities or “blue sky” laws of such
      jurisdictions within the United States as Laurus may reasonably request,
      provided, however, that the Company shall not for any such purpose be required
      to qualify generally to transact business as a foreign corporation in any
      jurisdiction where it is not so qualified or to consent to general service
      of
      process in any such jurisdiction;

     

    (e)       list
      the Registrable Securities covered by such Registration Statement with any
      securities exchange on which the Common Stock of the Company is then
      listed;

     

    (f)       immediately
      notify Laurus at any time when a Prospectus relating thereto is required to
      be
      delivered under the Securities Act, of the happening of any event of which
      the
      Company has knowledge as a result of which the Prospectus contained in such
      Registration Statement, as then in effect, includes an untrue statement of
      a
      material fact or omits to state a material fact required to be stated therein
      or
      necessary to make the statements therein not misleading in light of the
      circumstances then existing; and

     

    (g)       make
      available for inspection by Laurus and any attorney, accountant or other agent
      retained by Laurus, all publicly available, non-confidential financial and
      other
      records, pertinent corporate documents and properties of the Company, and cause
      the Company’s officers, directors and employees to supply all publicly
      available, non-confidential information reasonably requested by the attorney,
      accountant or agent of Laurus.

     

    4.       Registration
      Expenses.
      All
      expenses relating to the Company’s compliance with Sections 2 and 3 hereof,
      including, without limitation, all registration and filing fees, printing
      expenses, fees and disbursements of counsel and independent public accountants
      for the Company, fees and expenses (including reasonable counsel fees) incurred
      in connection with complying with state securities or “blue sky” laws, fees of
      the NASD, transfer taxes, fees of transfer agents and registrars, fees of,
      and
      disbursements incurred by, one counsel for the Holders are called “Registration
      Expenses”. All selling commissions applicable to the sale of Registrable
      Securities, including any fees and disbursements of any special counsel to
      the
      Holders beyond those included in Registration Expenses, are called “Selling
      Expenses.” The Company shall only be responsible for all Registration
      Expenses.

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    5.       Indemnification.

     

    (a)       In
      the event of a registration of any Registrable Securities under the Securities
      Act pursuant to this Agreement, the Company will indemnify and hold harmless
      each Holder, and its officers, directors and each other person, if any, who
      controls such Holder within the meaning of the Securities Act, against any
      losses, claims, damages or liabilities, joint or several, to which such Holder,
      or such persons may become subject under the Securities Act or otherwise,
      insofar as such losses, claims, damages or liabilities (or actions in respect
      thereof) arise out of or are based upon any untrue statement or alleged untrue
      statement of any material fact contained in any Registration Statement under
      which such Registrable Securities were registered under the Securities Act
      pursuant to this Agreement, any preliminary Prospectus or final Prospectus
      contained therein, or any amendment or supplement thereof, or arise out of
      or
      are based upon the omission or alleged omission to state therein a material
      fact
      required to be stated therein or necessary to make the statements therein not
      misleading, and will reimburse such Holder, and each such person for any
      reasonable legal or other expenses incurred by them in connection with
      investigating or defending any such loss, claim, damage, liability or action;
      provided,
      however,
      that
      the Company will not be liable in any such case if and to the extent that any
      such loss, claim, damage or liability arises out of or is based upon an untrue
      statement or alleged untrue statement or omission or alleged omission so made
      in
      conformity with information furnished by or on behalf of Laurus or any such
      person in writing specifically for use in any such document.

     

    (b)       In
      the event of a registration of the Registrable Securities under the Securities
      Act pursuant to this Agreement, Laurus will indemnify and hold harmless the
      Company, and its officers, directors and each other person, if any, who controls
      the Company within the meaning of the Securities Act, against all losses,
      claims, damages or liabilities, joint or several, to which the Company or such
      persons may become subject under the Securities Act or otherwise, insofar as
      such losses, claims, damages or liabilities (or actions in respect thereof)
      arise out of or are based upon any untrue statement or alleged untrue statement
      of any material fact which was furnished in writing by Laurus to the Company
      expressly for use in (and such information is contained in) the Registration
      Statement under which such Registrable Securities were registered under the
      Securities Act pursuant to this Agreement, any preliminary Prospectus or final
      Prospectus contained therein, or any amendment or supplement thereof, or arise
      out of or are based upon the omission or alleged omission to state therein
      a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading, and will reimburse the Company and each such person
      for
      any reasonable legal or other expenses incurred by them in connection with
      investigating or defending any such loss, claim, damage, liability or action,
      provided,
      however,
      that
      Laurus will be liable in any such case if and only to the extent that any such
      loss, claim, damage or liability arises out of or is based upon an untrue
      statement or alleged untrue statement or omission or alleged omission so made
      in
      conformity with information furnished in writing to the Company by or on behalf
      of Laurus specifically for use in any such document. Notwithstanding the
      provisions of this paragraph, Laurus shall not be required to indemnify any
      person or entity in excess of the amount of the aggregate net proceeds received
      by Laurus in respect of Registrable Securities in connection with any such
      registration under the Securities Act.

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (c)       Promptly
      after receipt by a party entitled to claim indemnification hereunder (an
“Indemnified Party”) of notice of the commencement of any action, such
      Indemnified Party shall, if a claim for indemnification in respect thereof
      is to
      be made against a party hereto obligated to indemnify such Indemnified Party
      (an
“Indemnifying Party”), notify the Indemnifying Party in writing thereof, but the
      omission so to notify the Indemnifying Party shall not relieve it from any
      liability which it may have to such Indemnified Party other than under this
      Section 5(c) and shall only relieve it from any liability which it may have
      to
      such Indemnified Party under this Section 5(c) if and to the extent the
      Indemnifying Party is prejudiced by such omission. In case any such action
      shall
      be brought against any Indemnified Party and it shall notify the Indemnifying
      Party of the commencement thereof, the Indemnifying Party shall be entitled
      to
      participate in and, to the extent it shall wish, to assume and undertake the
      defense thereof with counsel satisfactory to such Indemnified Party, and, after
      notice from the Indemnifying Party to such Indemnified Party of its election
      so
      to assume and undertake the defense thereof, the Indemnifying Party shall not
      be
      liable to such Indemnified Party under this Section 5(c) for any legal expenses
      subsequently incurred by such Indemnified Party in connection with the defense
      thereof; if the Indemnified Party retains its own counsel, then the Indemnified
      Party shall pay all fees, costs and expenses of such counsel, provided,
      however,
      that,
      if the defendants in any such action include both the Indemnified Party and
      the
      Indemnifying Party and the Indemnified Party shall have reasonably concluded
      that there may be reasonable defenses available to it which are different from
      or additional to those available to the Indemnifying Party or if the interests
      of the Indemnified Party reasonably may be deemed to conflict with the interests
      of the Indemnifying Party, the Indemnified Party shall have the right to select
      one separate counsel and to assume such legal defenses and otherwise to
      participate in the defense of such action, with the reasonable expenses and
      fees
      of such separate counsel and other expenses related to such participation to
      be
      reimbursed by the Indemnifying Party as incurred.

     

    (d)       In
      order to provide for just and equitable contribution in the event of joint
      liability under the Securities Act in any case in which either (i) Laurus,
      or
      any officer, director or controlling person of Laurus, makes a claim for
      indemnification pursuant to this Section 5 but it is judicially determined
      (by
      the entry of a final judgment or decree by a court of competent jurisdiction
      and
      the expiration of time to appeal or the denial of the last right of appeal)
      that
      such indemnification may not be enforced in such case notwithstanding the fact
      that this Section 5 provides for indemnification in such case, or (ii)
      contribution under the Securities Act may be required on the part of Laurus
      or
      such officer, director or controlling person of Laurus in circumstances for
      which indemnification is provided under this Section 5; then, and in each such
      case, the Company and Laurus will contribute to the aggregate losses, claims,
      damages or liabilities to which they may be subject (after contribution from
      others) in such proportion so that Laurus is responsible only for the portion
      represented by the percentage that the public offering price of its securities
      offered by the Registration Statement bears to the public offering price of
      all
      securities offered by such Registration Statement, provided,
      however,
      that,
      in any such case, (A) Laurus will not be required to contribute any amount
      in
      excess of the public offering price of all such securities offered by it
      pursuant to such Registration Statement; and (B) no person or entity guilty
      of
      fraudulent misrepresentation (within the meaning of Section 10(f) of the Act)
      will be entitled to contribution from any person or entity who was not guilty
      of
      such fraudulent misrepresentation.

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    6.       Representations,
      Warranties and Covenants.

     

    (a)       The
      Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
      Act and, except with respect to certain matters which the Company has disclosed
      to Laurus on Schedule
      6(a)
      hereto,
      the Company has timely filed all proxy statements, reports, schedules, forms,
      statements and other documents required to be filed by it under the Exchange
      Act. The Company has filed (i) its Annual Report on Form 10-K for its fiscal
      year ended June 30, 2005 and (ii) its Quarterly Report on Form 10-Q for the
      fiscal quarters ended September 30, 2005, December 31, 2005 and March 31, 2006
      (collectively, the “SEC Reports”). Each SEC Report was, at the time of its
      filing or at the time of the filing of any amendment thereto, in substantial
      compliance with the requirements of its respective form and none of the SEC
      Reports, nor the financial statements (and the notes thereto) included in the
      SEC Reports, as of their respective filing dates or as of the respective filing
      dates of any amendments thereto, contained any untrue statement of a material
      fact or omitted to state a 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. The financial statements of the Company
      included in the SEC Reports comply as to form in all material respects with
      applicable accounting requirements and the published rules and regulations
      of
      the Commission or other applicable rules and regulations with respect thereto.
      Such financial statements have been prepared in accordance with generally
      accepted accounting principles (“GAAP”) applied on a consistent basis during the
      periods involved (except (i) as may be otherwise indicated in such financial
      statements or the notes thereto or (ii) in the case of unaudited interim
      statements, to the extent they may not include footnotes or may be condensed)
      and fairly present in all material respects the financial condition, the results
      of operations and the cash flows of the Company and its subsidiaries, on a
      consolidated basis, as of, and for, the periods presented in each such SEC
      Report.

     

    (b)       The
      Common Stock is quoted for trading on the Pink Sheet and satisfies all
      requirements for the continuation of such quotation and the Company shall do
      all
      things necessary for the continuation of such quotation. The Company has not
      received any notice that its Common Stock will no longer be quoted on the Pink
      Sheets (except for prior notices which have been fully remedied) or that the
      Common Stock does not meet all requirements for the continuation of such listing
      or quotation, as applicable.

     

    (c)       Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offering of the Securities pursuant to the Note to be integrated with prior
      offerings by the Company for purposes of the Securities Act which would prevent
      the Company from selling the Common Stock pursuant to Rule 506 under the
      Securities Act, or any applicable exchange-related stockholder approval
      provisions, nor will the Company or any of its affiliates or subsidiaries take
      any action or steps that would cause the offering of the Common Stock to be
      integrated with other offerings (other than such concurrent offering to
      Laurus).

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (d)       The
      Warrants and the shares of Common Stock that Laurus may acquire pursuant to
      the
      Warrants are all restricted securities under the Securities Act as of the date
      of this Agreement. The Company will not issue any stop transfer order or other
      order impeding the sale and delivery of any of the Registrable Securities at
      such time as such Registrable Securities are registered for public sale or
      an
      exemption from registration is available, except as required by federal or
      state
      securities laws.

     

    (e)       The
      Company understands the nature of the Registrable Securities issuable upon
      the
      exercise of each Warrant and recognizes that the issuance of such Registrable
      Securities may have a potential dilutive effect. The Company specifically
      acknowledges that its obligation to issue the Registrable Securities is binding
      upon the Company and enforceable regardless of the dilution such issuance may
      have on the ownership interests of other shareholders of the
      Company.

     

    (f)       Except
      for agreements made in the ordinary course of business, there is no agreement
      that has not been filed with the Commission as an exhibit to a registration
      statement or to a form required to be filed by the Company under the Exchange
      Act, the breach of which could reasonably be expected to have a material and
      adverse effect on the Company and its subsidiaries, or would prohibit or
      otherwise interfere with the ability of the Company to enter into and perform
      any of its obligations under this Agreement in any material
      respect.

     

    (g)       The
      Company is increasing its authorized Common Stock so that it will have
      authorized and reserved a sufficient number of shares of Common Stock for the
      full exercise of the Warrants.

     

    (h)       The
      Company shall provide written notice to each Holder of (i) the occurrence of
      each Discontinuation Event (as defined below) and (ii) the declaration of
      effectiveness by the SEC of each Registration Statement required to be filed
      hereunder, in each case within one (1) business day of the date of each such
      occurrence and/or declaration.

     

    (i)       The
      Company hereby agrees that:

     

    (i)       No
      later than March 31, 2008, the Company shall deliver to Laurus evidence of
      the
      filing of a Proxy Statement with respect to an increase in the Company’s
      authorized common stock to an aggregate amount of not less than
      5,000,000,000.

     

    (ii)       No
      later than March 31, 2008, the Company shall deliver to Laurus evidence that
      the
      Company's Certificate of Incorporation has been amended to (a) increase the
      authorized Common Stock to an aggregate amount of not less than 5,000,000,000
      (the “Stock Increase”) and (b) immediately following the Stock Increase, cause a
      twenty-five (25) to one (1) reverse stock split to be effected pursuant to
      which
      the holders of shares of Common Stock will receive one (1) share of Common
      Stock
      for every twenty-five (25) shares of Common Stock then held.

     

    (iii)       Any
      breach by the Company of this Section 6(i) shall constitute an automatic Event
      of Default (as defined in the Note) and no cure or grace period shall be
      applicable thereto notwithstanding any other provision of the Note to the
      contrary.

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    7.       Miscellaneous.

     

    (a)       Remedies.
      In the
      event of a breach by the Company or by a Holder, of any of their respective
      obligations under this Agreement, each 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.

     

    (b)       No
      Piggyback on Registrations.
      Except
      as and to the extent set forth on Schedule 7(b) hereto, neither the Company
      nor
      any of its security holders (other than the Holders in such capacity pursuant
      hereto) may include securities of the Company in any Registration Statement
      other than the Registrable Securities, and the Company shall not after the
      date
      hereof enter into any agreement providing any such right for inclusion of shares
      in the Registration Statement to any of its security holders. Except as and
      to
      the extent specified in Schedule
      7(b)
      hereto,
      the Company has not previously entered into any agreement granting any
      registration rights with respect to any of its securities to any Person that
      have not been fully satisfied.

     

    (c)       Compliance.
      Each
      Holder 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 any Registration Statement.

     

    (d)       Discontinued
      Disposition.
      Each
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of a Discontinuation
      Event (as defined below), such Holder will forthwith discontinue disposition
      of
      such Registrable Securities under the applicable 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. The Company may provide appropriate stop orders to
      enforce the provisions of this paragraph. For purposes of this Agreement, a
      “Discontinuation Event” shall mean (i) 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); (ii) any request by the Commission or any other Federal
      or
      state governmental authority for amendments or supplements to such Registration
      Statement or Prospectus or for additional information; (iii) the issuance by
      the
      Commission of any stop order suspending the effectiveness of such Registration
      Statement covering any or all of the Registrable Securities or the initiation
      of
      any Proceedings for that purpose; (iv) 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; and/or (v) the occurrence of any event or passage of time that makes
      the financial statements included in such Registration Statement ineligible
      for
      inclusion therein or any statement made in such 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
      such
      Registration Statement, Prospectus or other documents so that, in the case
      of
      such Registration Statement or 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.

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (e)       Piggy-Back
      Registrations.
      If at
      any time during the applicable Effectiveness Period there is not an effective
      Registration Statement covering all of the Registrable Securities required
      to be
      covered during such Effectiveness Period and 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 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 stock option
      or other employee benefit plans, then the Company shall send to each Holder
      written notice of such determination and, if within fifteen (15) days after
      receipt 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, to the extent the Company
      may
      do so without violating registration rights of others which exist as of the
      date
      of this Agreement, subject to customary underwriter cutbacks applicable to
      all
      holders of registration rights and subject to obtaining any required consent
      of
      any selling stockholder(s) to such inclusion under such registration
      statement.

     

    (f)       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 the Holders 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 certain Holders and that does not directly or indirectly affect the
      rights of other Holders may be given by Holders of at least a majority 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.

     

    (g)       Notices.
      Any
      notice or request hereunder may be given to the Company or Laurus at the
      respective addresses set forth below or as may hereafter be specified in a
      notice designated as a change of address under this Section 7(g). Any notice
      or
      request hereunder shall be given by registered or certified mail, return receipt
      requested, hand delivery, overnight mail, Federal Express or other national
      overnight next day carrier (collectively, “Courier”) or telecopy (confirmed by
      mail). Notices and requests shall be, in the case of those by hand delivery,
      deemed to have been given when delivered to any party to whom it is addressed,
      in the case of those by mail or overnight mail, deemed to have been given three
      (3) business days after the date when deposited in the mail or with the
      overnight mail carrier, in the case of a Courier, the next business day
      following timely delivery of the package with the Courier, and, in the case
      of a
      telecopy, when confirmed. The address for such notices and communications shall
      be as follows:

     

    
      	
               

              If
                to the Company:

            	
              Thomas
                Equipment, Inc.

              1475
                32nd Avenue

              Lachine,
                Quebec H8T 3J1, Canada

              Attention:       Luigi
                LoBasso

              Facsimile:       (514)
                635-7010

            
	
               

              with
                a copy to:

            	
              Sichenzia
                Ross Friedman Ference LLP

              1665
                Avenue of the Americas

              New
                York, New York 10018

              Attention:       Thomas
                A. Rose, Esq.

              Facsimile:       (212)
                930-9725

            
	
               

              If
                to a Purchaser:

            	
               

              To
                the address set forth under such Purchaser name on the signature
                pages
                hereto

            
	
               

              If
                to any other Person who is

              then
                the registered Holder:

            	
               

              To
                the address of such Holder as it appears in the stock transfer books
                of
                the Company

            

    

     

    or
      such
      other address as may be designated in writing hereafter in accordance with
      this
      Section 7(g) by such Person.

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (h)       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 each Holder. Each Holder may assign their
      respective rights hereunder to any person or entity.

     

    (i)       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.

     

    (j)       Governing
      Law, Jurisdiction and Waiver of Jury Trial.
      THIS
      AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
      THE
      LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
      SUCH
      STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The Company hereby
      consents and agrees that the state or federal courts located in the County
      of
      New York, State of New York shall have exclusion jurisdiction to hear and
      determine any Proceeding between the Company, on the one hand, and Laurus,
      on
      the other hand, pertaining to this Agreement or to any matter arising out of
      or
      related to this Agreement; provided,
      that
      Laurus and the Company acknowledge that any appeals from those courts may have
      to be heard by a court located outside of the County of New York, State of
      New
      York, and further provided,
      that
      nothing in this Agreement shall be deemed or operate to preclude Laurus from
      bringing a Proceeding in any other jurisdiction to collect the obligations,
      to
      realize on the Collateral or any other security for the obligations, or to
      enforce a judgment or other court order in favor of Laurus. The Company
      expressly submits and consents in advance to such jurisdiction in any Proceeding
      commenced in any such court, and the Company hereby waives any objection which
      it may have based upon lack of personal jurisdiction, improper venue or
forum
      non conveniens.
      The
      Company hereby waives personal service of the summons, complaint and other
      process issued in any such Proceeding and agrees that service of such summons,
      complaint and other process may be made by registered or certified mail
      addressed to the Company at the address set forth in Section 7(g) and that
      service so made shall be deemed completed upon the earlier of the Company’s
      actual receipt thereof or three (3) days after deposit in the U.S. mails, proper
      postage prepaid. The parties hereto desire that their disputes be resolved
      by a
      judge applying such applicable laws. Therefore, to achieve the best combination
      of the benefits of the judicial system and of arbitration, the parties hereto
      waive all rights to trial by jury in any Proceeding brought to resolve any
      dispute, whether arising in contract, tort, or otherwise between Laurus and/or
      the Company arising out of, connected with, related or incidental to the
      relationship established between then in connection with this Agreement. If
      either party hereto shall commence a Proceeding to enforce any provisions of
      this Agreement, then the prevailing party in such Proceeding shall be reimbursed
      by the other party for its reasonable attorneys’ fees and other costs and
      expenses incurred with the investigation, preparation and prosecution of such
      Proceeding.

     

    (k)       Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any remedies
      provided by law.

     

    (l)       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 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.

     

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

     

    [Balance
      of page intentionally left blank; signature page follows]

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

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

    
      	 	 	 
	 	
              THOMAS
                EQUIPMENT, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ MICHAEL
              LUTHER
	 	
              

              Name:
                Michael Luther

            
	 	
              Title:
                CEO

            

    

     

    
      	 	 	 
	 	
              LAURUS
                MASTER FUND, LTD.

            
	 
 	 
 	 
 
	
            	By:  	/s/ DAVID
              GRIN
	 	
              

              Name:
                David Grin 

            
	 	
              Title:
                Fund Manager

            

    

    
      	
              Address
                for Notices:

              

              Laurus
                Master Fund, Ltd.

              c/o
                M&C Corporate Services Limited

              P.O.
                Box 309 GT

              Ugland
                House 

              George
                Town

              South
                Church Street

              Grand
                Cayman, Cayman Islands

              Facsimile:
                345-949-8080

              

              with
                copy to:

              

              Laurus
                Capital Management, LLC

              335
                Madison Avenue, 10th Floor

              New
                York, New York 10017

              Attention:
                Portfolio Services

              Facsimile:
                212-541-4410

            

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

     

    ____________,
      200___

     

    [Continental
      Stock Transfer

    &
      Trust Company

    Two
      Broadway

    New
      York,
      New York 10004

    Attn:
      William Seegraber]

     

    Re:       Thomas
      Equipment, Inc. Registration Statement on Form [S-3]

     

    Ladies
      and Gentlemen:

     

    As
      counsel to Thomas Equipment, Inc., a Delaware corporation (the “Company”), we
      have been requested to render our opinion to you in connection with the resale
      by the individuals or entitles listed on Schedule
      A
      attached
      hereto (the “Selling Stockholders”), of an aggregate of __________ shares (the
“Shares”) of the Company’s Common Stock.

     

    A
      Registration Statement on Form [S-3] under the Securities Act of 1933, as
      amended (the “Act”), with respect to the resale of the Shares was declared
      effective by the Securities and Exchange Commission on [date]. Enclosed is
      the
      Prospectus dated [date]. We understand that the Shares are to be offered and
      sold in the manner described in the Prospectus.

     

    Based
      upon the foregoing, upon request by the Selling Stockholders at any time while
      the registration statement remains effective, it is our opinion that the Shares
      have been registered for resale under the Act and new certificates evidencing
      the Shares upon their transfer or re-registration by the Selling Stockholders
      may be issued without restrictive legend. We will advise you if the registration
      statement is not available or effective at any point in the future.

     

    
      	
              Very
                truly yours,

               

              [Company
                counsel]

            

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
      A to Exhibit A

    
      	
               

              Selling
                Stockholder

            	
               

              R/N/O

            	
              Shares

              Being
                Offered

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    

     

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SCHEDULE
      6(a)

     

     

    None

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

    SCHEDULE
      7(b)

     

    1.       Common
      Stock Purchase Warrant dated November 8, 2006 issued by the Company to Federal
      Partners, L.P. exercisable into 52,500,000 shares of Common Stock at an exercise
      price of $0.125.

     

    2.       Common
      Stock Purchase Warrant dated November 8, 2006 issued by the Company to Federal
      Partners, L.P. exercisable into 52,500,000 shares of Common Stock at an exercise
      price of $0.01.

     

    3.       Common
      Stock Purchase Warrant dated November 8, 2006 issued by the Company to Laurus
      exercisable into 52,500,000 shares of Common Stock at an exercise price of
      $0.125.

     

    4.       Common
      Stock Purchase Warrant dated November 8, 2006 issued by the Company to Laurus
      exercisable into 52,500,000 shares of Common Stock at an exercise price of
      $0.01.

     

    5.       Common
      Stock Purchase Warrant dated May 2, 2007 issued by the Company to Laurus
      exercisable into 562,998,132 shares of Common Stock at an exercise price of
      $0.01.

     

    6.       4,854,426
      shares of Common Stock held by certain former shareholders of Pneutech Inc.
      

     

    7.       168,283,341
      shares of Common Stock held by the preferred shareholders.

     

    8.       Warrants
      held by the preferred shareholders exercisable into 11,500,000 shares of Common
      Stock.

     

    9.       Warrants
      held by the preferred shareholders exercisable into 8,063,658 shares of Common
      Stock.

     

    10.     Warrants
      held by the preferred shareholders exercisable into 60,416,657 shares of Common
      Stock.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]