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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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