THIS NOTE AND THE COMMON SHARES ISSUABLE
UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON
SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATES SECURITIES LAWS
OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO Thomas Equipment, INC.
(f/k/a Maxim Mortgage Corporation) THAT
SUCH REGISTRATION IS NOT REQUIRED.
AMENDED AND RESTATED
SECURED REVOLVING NOTE
FOR VALUE
RECEIVED, each of Thomas Equipment, INC. (f/k/a Maxim Mortgage
Corporation), a Delaware corporation
("Thomas Equipment"), and THOMAS VENTURES,
INC., a Delaware corporation ("Thomas
Ventures" and together with Thomas
Equipment, each a "Borrower" and
collectively the "Borrowers"), jointly and
severally promises to pay to LAURUS MASTER
FUND, LTD., c/o M&C Corporate
Services Limited, P.O. Box 309 GT, Ugland
House, South Church Street, George
Town, Grand Cayman, Cayman Islands, Fax:
345-949-8080 (the "Holder") or its
registered assigns, on order, the sum of
Twenty Million Dollars ($20,000,000)
or, if different, the aggregate principal
amount of all "Revolving Loans" (as
such term is defined in the Security
Agreement referred to below), together with
any accrued and unpaid interest hereon, on
November 9, 2007 (the "Maturity
Date")
Capitalized terms used herein without definition shall have the
meanings
ascribed to such terms in the Security and
Purchase Agreement among the
Borrowers and the Holder dated as of
November 9, 2004 (as amended, modified and
supplemented from time to time, the
"Security Agreement").
The following terms shall apply to this
Note:
ARTICLE I
CONTRACT RATE & PREPAYMENTS
1.1.
Interest Rate. Subject to Sections 3.11, 4.1 and 5.7 hereof,
interest
payable on this Note shall accrue at a rate
per annum equal to the "prime rate"
published in The Wall Street Journal from
time to time (the "Prime Rate"), plus
three percent (3%) (the "Contract Rate").
The Prime Rate shall be increased or
decreased as the case may be for each
increase or decrease in the Prime Rate in
an amount equal to such increase or
decrease in the Prime Rate; each change to
be effective as of the day of the change in
such rate in accordance with the
terms of the Security Agreement. Subject to
Section 1.2, the Contract Rate shall
not be less than seven and one-half percent
(7.50%).
1.2.
Contract Rate Adjustments and Payments. The Contract Rate shall
be
calculated on the last business day of each
month hereafter until the Maturity
Date (each a "Determination Date") and
shall be subject to adjustment as set
forth herein. If (i) Thomas Equipment shall
have registered the shares of Thomas
Equipment's common stock delivered to the
Holder on the Closing Date and the
shares of Thomas Equipment's Common
underlying each of the conversion of the
Minimum Borrowing Notes, the Secured
Convertible Term Note, the Options and that
certain warrant issued to Holder on a
registration statement declared effective
by the Securities and Exchange Commission
(the "SEC"), and (ii) the market price
(the "Market Price") of the Common Stock as
reported by Bloomberg, L.P. on the
Principal Market (as defined below) for the
five (5) trading days immediately
preceding a Determination Date exceeds the
then applicable Fixed Conversion
Price by at least twenty five percent
(25%), the Contract Rate for the
succeeding calendar month shall
automatically be reduced by 200 basis points
(200 b.p.) (2.0%) for each incremental
twenty five percent (25%) increase in the
Market Price of the Common Stock above the
then applicable Fixed Conversion
Price. Notwithstanding the foregoing (and
anything to the contrary contained in
herein), in no event shall the Contract
Rate be less than zero percent (0%).
Interest shall be (i) calculated on the
basis of a 360 day year, and (ii)
payable monthly, in arrears, commencing on
December 1, 2004 and on the first
business day of each consecutive calendar
month thereafter until the Maturity
Date (and on the Maturity Date), whether by
acceleration or otherwise (each, a
"Contract Rate Payment Date").
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1.3.
Allocation of Principal to Minimum Borrowing Note. In the event
that
the amount due and payable hereunder should
equal or exceed $8,000,000, to the
extent that the outstanding balance on the
Minimum Borrowing Note shall be less
than $8,000,000 (the difference of
$8,000,000 less the actual balance of the
Minimum Borrowing Note, the "Available
Minimum Borrowing"), such portion of the
balance hereof as shall equal the Available
Minimum Borrowing shall be deemed to
be simultaneously extinguished on this Note
and transferred to, and evidenced
by, a Minimum Borrowing Note.
ARTICLE II
HOLDER'S
CONVERSION RIGHTS
2.1.
Optional Conversion. Subject to the terms of this Article II,
the
Holder shall have the right, but not the
obligation, at any time until the
Maturity Date, or during an Event of
Default (as defined in Article IV), and to
convert all or any portion of the
outstanding Principal Amount and/or accrued
interest and fees due and payable into
fully paid and nonassessable restricted
shares of the Common Stock at the Fixed
Conversion Price (defined below). For
purposes hereof, subject to Section 2.5
hereof, the "Fixed Conversion Price"
means an amount equal to $1.50.
2.2.
Conversion Limitation. Notwithstanding anything contained herein
to
the contrary, the Holder shall not be
entitled to convert pursuant to the terms
of this Note an amount that would be
convertible into that number of Conversion
Shares which would exceed the difference
between the number of shares of Common
Stock beneficially owned by such Holder or
issuable upon exercise of the warrant
and the option held by such Holder and
9.99% of the outstanding shares of Common
Stock of Thomas Equipment. 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 Conversion Shares
limitation described in this Section 2.2
shall automatically become null and
void without any notice to any Borrower
upon the occurrence and during the
continuance beyond any applicable grace
period of an Event of Default, or upon
65 days prior notice to Thomas
Equipment.
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2.3.
Mechanics of Holder's Conversion. In the event that the Holder
elects
to convert this Note into Common Stock, the
Holder shall give notice of such
election by delivering an executed and
completed notice of conversion ("Notice
of Conversion") to Thomas Equipment and
such Notice of Conversion shall provide
a breakdown in reasonable detail of the
Principal Amount, accrued interest and
fees that are being converted. On each
Conversion Date (as hereinafter defined)
and in accordance with its Notice of
Conversion, the Holder shall make the
appropriate reduction to the Principal
Amount, accrued interest and fees as
entered in its records and shall provide
written notice thereof to Thomas
Equipment on the Conversion Date. Each date
on which a Notice of Conversion is
delivered or telecopied to Thomas Equipment
in accordance with the provisions
hereof shall be deemed a Conversion Date
(the "Conversion Date"). A form of
Notice of Conversion to be employed by the
Holder is annexed hereto as Exhibit
A. Pursuant to the terms of the Notice of
Conversion, Thomas Equipment will
issue instructions to the transfer agent
accompanied by an opinion of counsel
within two (2) business days of the date of
the delivery to Thomas Equipment of
the Notice of Conversion and shall cause
the transfer agent to transmit the
certificates representing the Conversion
Shares to the Holder by crediting the
account of the Holder's designated broker
with the Depository Trust Corporation
("DTC") through its Deposit Withdrawal
Agent Commission ("DWAC") system within
three (3) business days after receipt by
Thomas Equipment of the Notice of
Conversion (the "Delivery Date"). In the
case of the exercise of the conversion
rights set forth herein the conversion
privilege shall be deemed to have been
exercised and the Conversion Shares
issuable upon such conversion shall be
deemed to have been issued upon the date of
receipt by Thomas Equipment of the
Notice of Conversion. The Holder shall be
treated for all purposes as the record
holder of such Common Stock, unless the
Holder provides Thomas Equipment written
instructions to the contrary.
2.4. Late
Payments. Each Borrower understands that a delay in the
delivery
of the shares of Common Stock in the form
required pursuant to this Article
beyond the Delivery Date could result in
economic loss to the Holder. As
compensation to the Holder for such loss,
each Borrower agrees to jointly and
severally pay late payments to the Holder
for late issuance of such shares in
the form required pursuant to this Article
III upon conversion of the Note, in
the amount equal to $500 per business day
after the Delivery Date. Each Borrower
shall pay any payments incurred under this
Section in immediately available
funds upon demand.
2.5.
Adjustment Provisions. The Fixed Conversion Price and number and
kind
of shares or other securities to be issued
upon conversion determined pursuant
to Section 2.1 shall be subject to
adjustment from time to time upon the
happening of certain events while this
conversion right remains outstanding, as
follows:
A. Reclassification. If Thomas Equipment at any time shall, by
reclassification or otherwise, change the
Common Stock into the same or a
different number of securities of any class
or classes, this Note, as to the
unpaid Principal Amount and accrued
interest thereon, shall thereafter be deemed
to evidence the right to purchase an
adjusted number of such securities and kind
of securities as would have been issuable
as the result of such change with
respect to the Common Stock (i) immediately
prior to or (ii) immediately after,
such reclassification or other change at
the sole election of the Holder.
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