Contract

CENTURION GOLD HOLDINGS, INC. AND CERTAIN OF ITS SUBSIDIARIES MASTER SECURITY AGREEMENTTo: Laurus Master Fund, Ltd. c/o M&C Corporate Services Limited P.O. Box 309 GT Ugland House South Church Street George TownGrand Cayman, Cayman IslandsDate: February 18, 2005To Whom It May Concern: 1. To secure the payment of all Obligations (as hereafter defined),Centurion Gold Holdings, Inc., a Florida corporation (the “Company”), each ofthe other undersigned parties (other than Laurus Master Fund, Ltd, “Laurus”))and each other entity that is required to enter into this Master SecurityAgreement (each an “Assignor” and, collectively, the “Assignors”) hereby assignsand grants to Laurus a continuing security interest in all of the followingproperty now owned or at any time hereafter acquired by any Assignor, or inwhich any Assignor now have or at any time in the future may acquire any right,title or interest (the “Collateral”): all cash, cash equivalents, accounts,accounts receivable, deposit accounts (including, without limitation, theRestricted Account maintained at North Fork Bank (Account Name: Centurion GoldHoldings, Inc., Account Number: 2704053145) referred to in the RestrictedAccount Agreement dated September 23, 2004 (“Restricted Account A”), theRestricted Account maintained at North Fork Bank (Account Name: CenturionDelaware Gold Holdings, Inc. , Account Number: 270-405-4093) referred to in theRestricted Account Agreement of even date herewith) (the “Restricted AccountB”)), inventory, equipment, goods, documents, instruments (including, withoutlimitation, promissory notes), contract rights, general intangibles (including,without limitation, payment intangibles and an absolute right to license onterms no less favorable than those current in effect among our affiliates),chattel paper, supporting obligations, investment property (including, withoutlimitation, all equity interests owned by any Assignor), letter-of-creditrights, trademarks, trademark applications, tradestyles, patents, patentapplications, copyrights, copyright applications and other intellectual propertyin which any Assignor now have or hereafter may acquire any right, title orinterest, all proceeds and products thereof and all additions, accessions andsubstitutions thereto or therefore. In the event any Assignor wishes to financethe acquisition in the ordinary course of business of any hereafter acquiredequipment and have obtained a commitment from a financing source to finance suchequipment from an unrelated third party, Laurus agrees to release its securityinterest on such hereafter acquired equipment so financed by such third partyfinancing source. Except as otherwise defined herein, all capitalized terms usedherein shall have the meaning provided such terms in the Securities PurchaseAgreement referred to below. 2. The term “Obligations” as used herein shall mean and include all debts,liabilities and obligations owing by each Assignor to Laurus arising under, outof, or in connection with: (i) that certain Securities Purchase Agreement datedas of the date hereof by and between the Company and Laurus (the “SecuritiesPurchase Agreement”) and (ii) the Related Agreements referred to in theSecurities Purchase Agreement (the Securities Purchase Agreement and eachRelated Agreement, as each may be amended, modified, restated or supplementedfrom time to time, are collectively referred to herein as the “Documents”), andin connection with any documents, instruments or agreements relating to orexecuted in connection with the Documents or any documents, instruments oragreements referred to therein or otherwise, and in connection with any otherindebtedness, obligations or liabilities of any Assignor to Laurus, whether nowexisting or hereafter arising, direct or indirect, liquidated or unliquidated,absolute or contingent, due or not due and whether under, pursuant to orevidenced by a note, agreement, guaranty, instrument or otherwise, in each case,irrespective of the genuineness, validity, regularity or enforceability of suchObligations, or of any instrument evidencing any of the Obligations or of anycollateral therefor or of the existence or extent of such collateral, andirrespective of the allowability, allowance or disallowance of any or all of theObligations in any case commenced by or against any Assignor under Title 11,United States Code, including, without limitation, obligations or indebtednessof each Assignor for post-petition interest, fees, costs and charges that wouldhave accrued or been added to the Obligations but for the commencement of suchcase. 3. Each Assignor hereby jointly and severally represents, warrants andcovenants to Laurus that: (a) it is a corporation, partnership or limited liability company, as the case may be, validly existing, in good standing and organized under the respective laws of its jurisdiction of organization set forth on Schedule A, and each Assignor will provide Laurus thirty (30) days’ prior written notice of any change in any of its respective jurisdiction of organization; (b) its legal name is as set forth in its respective Certificate of Incorporation or other organizational document (as applicable) as amended through the date hereof and as set forth on Schedule A, and it will provide Laurus thirty (30) days’ prior written notice of any change in its legal name; (c) its organizational identification number (if applicable) is as set forth on Schedule A hereto, and it will provide Laurus thirty (30) days’ prior written notice of any change in any of its organizational identification number; (d) it is the lawful owner of the respective Collateral and it has the sole right to grant a security interest therein and will defend the Collateral against all claims and demands of all persons and entities; (e) it will keep its respective Collateral free and clear of all attachments, levies, taxes, liens, security interests and encumbrances of every kind and nature (“Encumbrances”), except (i) Encumbrances securing the Obligations and (ii) to the extent said Encumbrance does not secure indebtedness in excess of $50,000 and such Encumbrance is removed or otherwise released within ten (10) days of the creation thereof; 2 (f) it will, at its and the other Assignors joint and several cost and expense keep the Collateral in good state of repair (ordinary wear and tear excepted) and will not waste or destroy the same or any part thereof other than ordinary course discarding of items no longer used or useful in its or such other Assignors’ business; (g) it will not without Laurus’ prior written consent, sell, exchange, lease or otherwise dispose of the Collateral, whether by sale, lease or otherwise, except for the sale of inventory in the ordinary course of business and for the disposition or transfer in the ordinary course of business during any fiscal year of obsolete and worn-out equipment or equipment no longer necessary for its ongoing needs, having an aggregate fair market value of not more than $25,000 and only to the extent that: (i) the proceeds of any such disposition are used to acquire replacement Collateral which is subject to Laurus’ first priority perfected security interest, or are used to repay Obligations or to pay general corporate expenses; and (ii) following the occurrence of an Event of Default which continues to exist the proceeds of which are remitted to Laurus to be held as cash collateral for the Obligations; (h) it will insure or cause the Collateral to be insured against loss or damage by fire, theft, burglary, pilferage, loss in transit and such other hazards as Laurus shall specify in amounts and under policies by insurers acceptable to Laurus and all premiums thereon shall be paid by such Assignor and the policies delivered to Laurus. If any such Assignor fails to do so, Laurus may procure such insurance and the cost thereof shall be promptly reimbursed by the Assignors, jointly and severally, and shall constitute Obligations; (i) it will at all reasonable times allow Laurus or Laurus’ representatives free access to and the right of inspection of the Collateral; (j) such Assignor (jointly and severally with each other Assignor) hereby indemnifies and saves Laurus harmless from all loss, costs, damage, liability and/or expense, including reasonable attorneys’ fees, that Laurus may sustain or incur to enforce payment, performance or fulfillment of any of the Obligations and/or in the enforcement of this Master Security Agreement or in the prosecution or defense of any action or proceeding either against Laurus or any Assignor concerning any matter growing out of or in connection with this Master Security Agreement, and/or any of the Obligations and/or any of the Collateral except to the extent caused by Laurus’ own gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and nonappealable decision). 4. The occurrence of any of the following events or conditions shallconstitute an “Event of Default” under this Master Security Agreement: 3 (a) any covenant, warranty, representation or statement made or furnished to Laurus by the Assignor or on the Assignor’s behalf was breached in any material respect or false in any material respect when made or furnished, as the case may be, and, in the case of a covenant, if subject to cure, shall not be cured for a period of fifteen (15) days; (b) the loss, theft, substantial damage, destruction, sale or encumbrance to or of any of the Collateral or the making of any levy, seizure or attachment thereof or thereon except to the extent: (i) such loss is covered by insurance proceeds; or (ii) said levy, seizure or attachment does not secure indebtedness in excess of $100,000 and such levy, seizure or attachment has not been removed or otherwise released within ten (10) days of the creation or the assertion thereof; (b) any Assignor shall become insolvent, cease operations, dissolve, terminate our business existence, make an assignment for the benefit of creditors, suffer the appointment of a receiver, trustee, liquidator or custodian of all or any part of Assignors’ property; (c) any proceedings under any bankruptcy or insolvency law shall be commenced by or against any Assignor; (d) the Company shall repudiate, purport to revoke or fail to perform any or all of its obligations under any Note (after passage of applicable cure period, if any); or (e) an Event of Default shall have occurred under and as defined in any Document. 5. Upon the occurrence of any Event of Default and at any time thereafter,Laurus may declare all Obligations immediately due and payable and Laurus shallhave the remedies of a secured party provided in the Uniform Commercial Code asin effect in the State of New York, this Agreement and other applicable law.Upon the occurrence of any Event of Default and at any time thereafter, Lauruswill have the right to take possession of the Collateral and to maintain suchpossession on our premises or to remove the Collateral or any part thereof tosuch other premises as Laurus may desire. Upon Laurus’ request, each of theAssignors shall assemble or cause the Collateral to be assembled and make itavailable to Laurus at a place designated by Laurus. If any notification ofintended disposition of any Collateral is required by law, such notification, ifmailed, shall be deemed properly and reasonably given if mailed at least ten(10) days before such disposition, postage prepaid, addressed to any Assignoreither at such Assignor’s address shown herein or at any address appearing onLaurus’ records for such Assignor. Any proceeds of any disposition of any of theCollateral shall be applied by Laurus to the payment of all expenses inconnection with the sale of the Collateral, including reasonable attorneys’ feesand other legal expenses and disbursements and the reasonable expense ofretaking, holding, preparing for sale, selling, and the like, and any balance ofsuch proceeds may be applied by Laurus toward the payment of the Obligations insuch order of application as Laurus may elect, and each Assignor shall be liablefor any deficiency. For the avoidance of doubt, following the occurrence andduring the continuance of an Event of Default, Laurus shall have the immediateright to withdraw any and all monies contained in Restricted Account and/orRestricted Account B, as Laurus shall elect, or any other deposit accounts inthe name of any Assignor and controlled by Laurus and apply same to therepayment of the Obligations (in such order of application as Laurus may elect). 4 6. If any Assignor defaults in the performance or fulfillment of any ofthe terms, conditions, promises, covenants, provisions or warranties on suchAssignor’s part to be performed or fulfilled under or pursuant to this MasterSecurity Agreement, Laurus may, at its option without waiving its right toenforce this Master Security Agreement according to its terms, immediately or atany time thereafter and without notice to any Assignor, perform or fulfill thesame or cause the performance or fulfillment of the same for each Assignor’sjoint and several account and at each Assignor’s joint and several cost andexpense, and the cost and expense thereof (including reasonable attorneys’ fees)shall be added to the Obligations and shall be payable on demand with interestthereon at the highest rate permitted by law, or, at Laurus’ option, debited byLaurus from the Restricted Account or any other deposit accounts in the name ofthe Assignor and controlled by Laurus. 7. Each Assignor appoints Laurus, any of Laurus’ officers, employees orany other person or entity whom Laurus may designate as our attorney, with powerto execute such documents in each of our behalf and to supply any omittedinformation and correct patent errors in any documents executed by any Assignoror on any Assignor’s behalf; to file financing statements against us coveringthe Collateral (and, in connection with the filing of any such financingstatements, describe the Collateral as “all assets and all personal property,whether now owned and/or hereafter acquired” (or any substantially similarvariation thereof)); to sign our name on public records; and to do all otherthings Laurus deem necessary to carry out this Master Security Agreement. EachAssignor hereby ratifies and approves all acts of the attorney and neitherLaurus nor the attorney will be liable for any acts of commission or omission,nor for any error of judgment or mistake of fact or law other than grossnegligence or willful misconduct (as determined by a court of competentjurisdiction in a final and non-appealable decision). This power being coupledwith an interest, is irrevocable so long as any Obligations remains unpaid. 8. No delay or failure on Laurus’ part in exercising any right, privilegeor option hereunder shall operate as a waiver of such or of any other right,privilege, remedy or option, and no waiver whatever shall be valid unless inwriting, signed by Laurus and then only to the extent therein set forth, and nowaiver by Laurus of any default shall operate as a waiver of any other defaultor of the same default on a future occasion. Laurus’ books and recordscontaining entries with respect to the Obligations shall be admissible inevidence in any action or proceeding, shall be binding upon each Assignor forthe purpose of establishing the items therein set forth and shall constituteprima facie proof thereof. Laurus shall have the right to enforce any one ormore of the remedies available to Laurus, successively, alternately orconcurrently. Each Assignor agrees to join with Laurus in executing financingstatements or other instruments to the extent required by the Uniform CommercialCode in form satisfactory to Laurus and in executing such other documents orinstruments as may be required or deemed necessary by Laurus for purposes ofaffecting or continuing Laurus’ security interest in the Collateral. 5 9. This Master Security Agreement shall be governed by and construed inaccordance with the laws of the State of New York and cannot be terminatedorally. All of the rights, remedies, options, privileges and elections given toLaurus hereunder shall inure to the benefit of Laurus’ successors and assigns.The term “Laurus” as herein used shall include Laurus, any parent of Laurus’,any of Laurus’ subsidiaries and any co-subsidiaries of Laurus’ parent, whethernow existing or hereafter created or acquired, and all of the terms, conditions,promises, covenants, provisions and warranties of this Agreement shall inure tothe benefit of each of the foregoing, and shall bind the representatives,successors and assigns of each Assignor. Laurus and each Assignor hereby (a)waive any and all right to trial by jury in litigation relating to thisAgreement and the transactions contemplated hereby and each Assignor agrees notto assert any counterclaim in such litigation, (b) submit to the nonexclusivejurisdiction of any New York State court sitting in the borough of Manhattan,the city of New York and (c) waive any objection Laurus or each Assignor mayhave as to the bringing or maintaining of such action with any such court. 10. It is understood and agreed that any person or entity that desires tobecome an Assignor hereunder, or is required to execute a counterpart of thisMaster Security Agreement after the date hereof pursuant to the requirements ofany Document, shall become an Assignor hereunder by (x) executing a JoinderAgreement in form and substance satisfactory to Laurus, (y) deliveringsupplements to such exhibits and annexes to such Documents as Laurus shallreasonably request and (z) taking all actions as specified in this Agreement aswould have been taken by such Assignor had it been an original party to thisAgreement, in each case with all documents required above to be delivered toLaurus and with all documents and actions required above to be taken to thereasonable satisfaction of Laurus. 11. All notices from Laurus to any Assignor shall be sufficiently given ifmailed or delivered to such Assignor’s address set forth below. Very truly yours, CENTURION GOLD HOLDINGS, INC. By: ____________________ Name: Title: Address: CENTURION DELAWARE GOLD HOLDINGS, INC. By: ____________________ Name: Title: Address: 6 ACKNOWLEDGED: LAURUS MASTER FUND, LTD. By:______________________ Name: Title: 7 SCHEDULE A- ——————————————————————————– Entity Jurisdiction of Organization Identification Organization Number- ——————————————————————————– [Assignors]- ——————————————————————————— ——————————————————————————— ——————————————————————————— ——————————————————————————— ——————————————————————————– 8