Contract

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 CENTURION GOLD HOLDINGS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED. Right to Purchase up to 3,750,000 Shares of Common Stock of Centurion Gold Holdings, Inc. (subject to adjustment as provided herein) COMMON STOCK PURCHASE WARRANTNo. _________________ Issue Date: February 18, 2005 CENTURION GOLD HOLDINGS, INC., a corporation organized under the laws ofthe State of Florida (“CGHI”), hereby certifies that, for value received, LAURUSMASTER FUND, LTD., or assigns (the “Holder”), is entitled, subject to the termsset forth below, to purchase from the Company (as defined herein) from and afterthe Issue Date of this Warrant and at any time or from time to time before 5:00p.m., New York time, through the close of business February 18, 2012 (the”Expiration Date”), up to 3,750,000 fully paid and nonassessable shares ofCommon Stock (as hereinafter defined), $0.0001 par value per share, at theapplicable Exercise Price per share (as defined below). The number and characterof such shares of Common Stock and the applicable Exercise Price per share aresubject 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 CGHI and any corporation which shall succeed, or assume the obligations of, CGHI hereunder. (b) The term “Common Stock” includes (i) the Company’s Common Stock, par value $0.0001 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 the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the 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 $0.34. 1. Exercise of Warrant. 1.1 Number of Shares Issuable upon Exercise. From and after the datehereof through and including the Expiration Date, the Holder shall be entitledto receive, upon exercise of this Warrant in whole or in part, by delivery of anoriginal or fax copy of an exercise notice in the form attached hereto asExhibit A (the “Exercise Notice”), shares of Common Stock of the Company,subject to adjustment pursuant to Section 4. 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. (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 the Warrant are outstanding at the Determination Date. 1.3 Company Acknowledgment. The Company will, at the time of theexercise of the Warrant, upon the request of the holder hereof acknowledge inwriting its continuing obligation to afford to such holder any rights to whichsuch holder shall continue to be entitled after such exercise in accordance withthe provisions of this Warrant. If the holder shall fail to make any suchrequest, such failure shall not affect the continuing obligation of the Companyto afford to such holder any such rights. 2 1.4 Trustee for Warrant Holders. In the event that a bank or trustcompany shall have been appointed as trustee for the holders of the Warrantpursuant to Subsection 3.2, such bank or trust company shall have all the powersand duties of a warrant agent (as hereinafter described) and shall accept, inits own name for the account of the Company or such successor person as may beentitled thereto, all amounts otherwise payable to the Company or suchsuccessor, as the case may be, on exercise of this Warrant pursuant to thisSection 1. 2. Procedure for Exercise. 2.1 Delivery of Stock Certificates, Etc., on Exercise. The Companyagrees that the shares of Common Stock purchased upon exercise of this Warrantshall be deemed to be issued to the Holder as the record owner of such shares asof the close of business on the date on which this Warrant shall have beensurrendered and payment made for such shares in accordance herewith. As soon aspracticable after the exercise of this Warrant in full or in part, and in anyevent within three (3) business days thereafter, the Company at its expense(including the payment by it of any applicable issue taxes) will cause to beissued in the name of and delivered to the Holder, or as such Holder (uponpayment by such Holder of any applicable transfer taxes) may direct incompliance with applicable securities laws, a certificate or certificates forthe number of duly and validly issued, fully paid and nonassessable shares ofCommon Stock (or Other Securities) to which such Holder shall be entitled onsuch exercise, plus, in lieu of any fractional share to which such holder wouldotherwise be entitled, cash equal to such fraction multiplied by the then FairMarket Value of one full share, together with any other stock or othersecurities and property (including cash, where applicable) to which such Holderis entitled upon such exercise pursuant to Section 1 or otherwise. 2.2 Exercise. Payment may be made either (i) in cash or by certifiedor official bank check payable to the order of the Company equal to theapplicable aggregate Exercise Price, (ii) by delivery of the Warrant, or sharesof Common Stock and/or Common Stock receivable upon exercise of the Warrant inaccordance with the formula set forth below, or (iii) by a combination of any ofthe foregoing methods, for the number of Common Shares specified in suchExercise Notice (as such exercise number shall be adjusted to reflect anyadjustment in the total number of shares of Common Stock issuable to the Holderper the terms of this Warrant) and the Holder shall thereupon be entitled toreceive the number of duly authorized, validly issued, fully-paid andnon-assessable shares of Common Stock (or Other Securities) determined asprovided herein. Notwithstanding any provisions herein to the contrary, if theFair Market Value of one share of Common Stock is greater than the ExercisePrice (at the date of calculation as set forth below), in lieu of exercisingthis Warrant for cash, the Holder may elect to 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 togetherwith the properly endorsed Exercise Notice in which event the Company shallissue to the Holder a number of shares of Common Stock computed using thefollowing formula: X=Y (A-B) ——- A Where X = the number of shares of Common Stock to be issued to the Holder 3 Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the 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 timeor from time to time, the Company shall (a) effect a reorganization, (b)consolidate with or merge into any other person, or (c) transfer all orsubstantially all of its properties or assets to any other person under any planor arrangement contemplating the dissolution of the Company, then, in each suchcase, as a condition to the consummation of such a transaction, proper andadequate provision shall be made by the Company whereby the Holder of thisWarrant, on the exercise hereof as provided in Section 1 at any time after theconsummation of such reorganization, consolidation or merger or the effectivedate of such dissolution, as the case may be, shall receive, in lieu of theCommon Stock (or Other Securities) issuable on such exercise prior to suchconsummation or such effective date, the stock and other securities and property(including cash) to which such Holder would have been entitled upon suchconsummation or in connection with such dissolution, as the case may be, if suchHolder had so exercised this Warrant, immediately prior thereto, all subject tofurther adjustment thereafter as provided in Section 4. 3.2 Dissolution. In the event of any dissolution of the Companyfollowing the transfer of all or substantially all of its properties or assets,the Company, concurrently with any distributions made to holders of its CommonStock, shall at its expense deliver or cause to be delivered to the Holder thestock and other securities and property (including cash, where applicable)receivable by the Holder of the Warrant pursuant to Section 3.1, or, if theHolder shall so instruct the Company, to a bank or trust company specified bythe Holder and having its principal office in New York, NY as trustee for theHolder of the Warrant (the “Trustee”). 3.3 Continuation of Terms. Upon any reorganization, consolidation,merger or transfer (and any dissolution following any transfer) referred to inthis Section 3, this Warrant shall continue in full force and effect and theterms hereof shall be applicable to the shares of stock and other securities andproperty receivable on the exercise of this Warrant after the consummation ofsuch reorganization, consolidation or merger or the effective date ofdissolution following any such transfer, as the case may be, and shall bebinding upon the issuer of any such stock or other securities, including, in thecase of any such transfer, the person acquiring all or substantially all of theproperties or assets of the Company, whether or not such person shall haveexpressly assumed the terms of this Warrant as provided in Section 4. In theevent this Warrant does not continue in full force and effect after theconsummation of the transactions described in this Section 3, then the Company’ssecurities and property (including cash, where applicable) receivable by theHolders of the Warrant will be delivered to Holder or the Trustee ascontemplated by Section 3.2. 4 4. Extraordinary Events Regarding Common Stock. In the event that theCompany shall (a) issue additional shares of the Common Stock as a dividend orother distribution on outstanding Common Stock, (b) subdivide its outstandingshares of Common Stock, or (c) combine its outstanding shares of the CommonStock into a smaller number of shares of the Common Stock, then, in each suchevent, the Exercise Price shall, simultaneously with the happening of suchevent, be adjusted by multiplying the then Exercise Price by a fraction, thenumerator of which shall be the number of shares of Common Stock outstandingimmediately prior to such event and the denominator of which shall be the numberof shares of Common Stock outstanding immediately after such event, and theproduct so obtained shall thereafter be the Exercise Price then in effect. TheExercise Price, as so adjusted, shall be readjusted in the same manner upon thehappening 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 shallthereafter, on the exercise hereof as provided in Section 1, be entitled toreceive shall be increased to a number determined by multiplying the number ofshares of Common Stock that would otherwise (but for the provisions of thisSection 4) be issuable on such exercise by a fraction of which (a) the numeratoris the Exercise Price that would otherwise (but for the provisions of thisSection 4) be in effect, and (b) the denominator is the Exercise Price in effecton the date of such exercise. 5. Certificate as to Adjustments. In each case of any adjustment orreadjustment in the shares of Common Stock (or Other Securities) issuable on theexercise of the Warrant, the Company at its expense will promptly cause itsChief Financial Officer or other appropriate designee to compute such adjustmentor readjustment in accordance with the terms of the Warrant and prepare acertificate setting forth such adjustment or readjustment and showing in detailthe facts upon which such adjustment or readjustment is based, including astatement of (a) the consideration received or receivable by the Company for anyadditional shares of Common Stock (or Other Securities) issued or sold or deemedto have been issued or sold, (b) the number of shares of Common Stock (or OtherSecurities) outstanding or deemed to be outstanding, and (c) the Exercise Priceand the number of shares of Common Stock to be received upon exercise of thisWarrant, in effect immediately prior to such adjustment or readjustment and asadjusted or readjusted as provided in this Warrant. The Company will forthwithmail a copy of each such certificate to the holder of the Warrant and anyWarrant agent of the Company (appointed pursuant to Section 11 hereof). 6. Reservation of Stock, Etc., Issuable on Exercise of Warrant. TheCompany will at all times reserve and keep available, solely for issuance anddelivery on the exercise of the Warrant, shares of Common Stock (or OtherSecurities) from time to time issuable on the exercise of the Warrant. 7. Assignment; Exchange of Warrant. Subject to compliance with applicablesecurities laws, this Warrant, and the rights evidenced hereby, may betransferred by any registered holder hereof (a “Transferor”) in whole or inpart. On the surrender for exchange of this Warrant, with the Transferor’sendorsement in the form of Exhibit B attached hereto (the “TransferorEndorsement Form”) and together with evidence reasonably satisfactory to theCompany demonstrating compliance with applicable securities laws, which shallinclude, without limitation, the provision of a legal opinion from theTransferor’s counsel (at the Company’s expense) that such transfer is exemptfrom the registration requirements of applicable securities laws, and withpayment by the Transferor of any applicable transfer taxes) will issue anddeliver to or on the order of the Transferor thereof a new Warrant of liketenor, in the name of the Transferor and/or the transferee(s) specified in suchTransferor Endorsement Form (each a “Transferee”), calling in the aggregate onthe face or faces thereof for the number of shares of Common Stock called for onthe face or faces of the Warrant so surrendered by the Transferor. 5 8. Replacement of Warrant. On receipt of evidence reasonably satisfactoryto the Company of the loss, theft, destruction or mutilation of this Warrantand, in the case of any such loss, theft or destruction of this Warrant, ondelivery of an indemnity agreement or security reasonably satisfactory in formand amount to the Company or, in the case of any such mutilation, on surrenderand cancellation of this Warrant, the Company at its expense will execute anddeliver, in lieu thereof, a new Warrant of like tenor. 9. Registration Rights. The Holder of this Warrant has been grantedcertain registration rights by the Company. These registration rights are setforth in a Registration Rights Agreement entered into by the Company and Holderdated as of even date of this Warrant. 10. Maximum Exercise. The Holder shall not be entitled to exercise thisWarrant on an exercise date, in connection with that number of shares of CommonStock which would be in excess of the sum of (i) the number of shares of CommonStock beneficially owned by the Holder and its affiliates on an exercise date,and (ii) the number of shares of Common Stock issuable upon the exercise of thisWarrant with respect to which the determination of this proviso is being made onan exercise date, which would result in beneficial ownership by the Holder andits affiliates of more than 4.99% of the outstanding shares of Common Stock ofthe Company on such date. For the purposes of the proviso to the immediatelypreceding sentence, beneficial ownership shall be determined in accordance withSection 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation13d-3 thereunder. Notwithstanding the foregoing, the restriction described inthis paragraph may be revoked upon 75 days prior notice from the Holder to theCompany and is automatically null and void upon an Event of Default under theNote made by the Company to the Holder dated the date hereof (as amended,modified or supplemented from time to time, the “Note”). 11. Warrant Agent. The Company may, by written notice to the each Holderof the Warrant, appoint an agent for the purpose of issuing Common Stock (orOther Securities) on the exercise of this Warrant pursuant to Section 1,exchanging this Warrant pursuant to Section 7, and replacing this Warrantpursuant to Section 8, or any of the foregoing, and thereafter any suchissuance, exchange or replacement, as the case may be, shall be made at suchoffice by such agent. 12. Transfer on the Company’s Books. Until this Warrant is transferred onthe books of the Company, the Company may treat the registered holder hereof asthe absolute owner hereof for all purposes, notwithstanding any notice to thecontrary. 13. Notices, Etc. All notices and other communications from the Company tothe Holder of this Warrant shall be mailed by first class registered orcertified mail, postage prepaid, at such address as may have been furnished tothe Company in writing by such Holder or, until any such Holder furnishes to theCompany an address, then to, and at the address of, the last Holder of thisWarrant who has so furnished an address to the Company. 6 14. Miscellaneous. This Warrant and any term hereof may be changed,waived, discharged or terminated only by an instrument in writing signed by theparty against which enforcement of such change, waiver, discharge or terminationis sought. This Warrant shall be governed by and construed in accordance withthe laws of State of New York without regard to principles of conflicts of laws.Any action brought concerning the transactions contemplated by this Warrantshall be brought only in the state courts of New York or in the federal courtslocated in the state of New York; provided, however, that the Holder may chooseto waive this provision and bring an action outside the state of New York. Theindividuals executing this Warrant on behalf of the Company agree to submit tothe jurisdiction of such courts and waive trial by jury. The prevailing partyshall be entitled to recover from the other party its reasonable attorney’s feesand costs. In the event that any provision of this Warrant is invalid orunenforceable under any applicable statute or rule of law, then such provisionshall be deemed inoperative to the extent that it may conflict therewith andshall be deemed modified to conform with such statute or rule of law. Any suchprovision which may prove invalid or unenforceable under any law shall notaffect the validity or enforceability of any other provision of this Warrant.The headings in this Warrant are for purposes of reference only, and shall notlimit or otherwise affect any of the terms hereof. The invalidity orunenforceability of any provision hereof shall in no way affect the validity orenforceability of any other provision hereof. The Company acknowledges thatlegal counsel participated in the preparation of this Warrant and, therefore,stipulates that the rule of construction that ambiguities are to be resolvedagainst the drafting party shall not be applied in the interpretation of thisWarrant 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 Warrant as of the datefirst written above. CENTURION GOLD HOLDINGS, INC.WITNESS: By: ——————————- Name: ——————————- Title:- ————————————– ——————————- 8 EXHIBIT A FORM OF SUBSCRIPTION (To Be Signed Only On Exercise Of Warrant)TO: Centurion Gold Holdings, Inc. Attention: Chief Financial Officer The undersigned, pursuant to the provisions set forth in the attachedWarrant (No.____), hereby irrevocably elects to purchase (check applicable box):________ ________ shares of the Common Stock covered by such Warrant; or_________ the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 2. The undersigned herewith makes payment of the full Exercise Price forsuch shares at the price per share provided for in such Warrant, which is$___________. Such payment takes the form of (check applicable box or boxes):________ $__________ in lawful money of the United States; and/or________ 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 2.2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 2. The undersigned requests that the certificates for such shares beissued in the name of, and delivered to______________________________________________ whose address is____________________________________________________________________________. The undersigned represents and warrants that all offers and sales by theundersigned of the securities issuable upon exercise of the within Warrant shallbe made pursuant to registration of the Common Stock under the Securities Act of1933, as amended (the “Securities Act”) or pursuant to an exemption fromregistration under the Securities Act.Dated: ________________________ __________________________________________ (Signature must conform to name of holder as specified on the face of the Warrant) Address: _________________________________ _________________________________ A-1 EXHIBIT B FORM OF TRANSFEROR ENDORSEMENT (To Be Signed Only On Transfer Of Warrant) For value received, the undersigned hereby sells, assigns, and transfersunto the person(s) named below under the heading “Transferees” the rightrepresented by the within Warrant to purchase the percentage and number ofshares of Common Stock of Centurion Gold Holdings, Inc. into which the withinWarrant relates specified under the headings “Percentage Transferred” and”Number Transferred,” respectively, opposite the name(s) of such person(s) andappoints each such person Attorney to transfer its respective right on the booksof Centurion Gold Holdings, Inc. with full power of substitution in thepremises. Percentage NumberTransferees Address Transferred 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) B-1