Contract

INVESTMENT AGREEMENTINVESTMENT AGREEMENT (this “AGREEMENT”), dated as of February 8, 2005 by andbetween Centurion Gold Holdings, Inc., a Florida corporation (the “Company”),and Dutchess Private Equities Fund, II, LP, a Delaware limited partnership (the”Investor”).Whereas, the parties desire that, upon the terms and subject to the conditionscontained herein, the Investor shall invest up to Twenty Five Million dollars($25,000,000) to purchase the Company’s Common Stock, $0.0001 par value pershare (the “Common Stock”);Whereas, such investments will be made in reliance upon the provisions ofSection 4(2) under the Securities Act of 1933, as amended (the “1933 Act”), Rule506 of Regulation D, and the rules and regulations promulgated thereunder,and/or upon such other exemption from the registration requirements of the 1933Act as may be available with respect to any or all of the investments in CommonStock to be made hereunder; andWhereas, contemporaneously with the execution and delivery of this Agreement,the parties hereto are executing and delivering a Registration Rights Agreementsubstantially in the form attached hereto (as amended from time to time, the”Registration Rights Agreement”) pursuant to which the Company has agreed toprovide certain registration rights under the 1933 Act, and the rules andregulations promulgated thereunder, and applicable state securities laws.NOW THEREFORE, in consideration of the foregoing recitals, which shall beconsidered an integral part of this Agreement, the covenants and agreements setforth hereafter, and other good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, the Company and the Investor herebyagree as follows:SECTION 1. DEFINITIONS. As used in this Agreement, the following terms shall have the followingmeanings specified or indicated below, and such meanings shall be equallyapplicable to the singular and plural forms of such defined terms. “1933 Act” shall have the meaning set forth in the preamble of thisagreement. “1934 Act” shall mean the Securities Exchange Act of 1934, as it may beamended. “Affiliate” shall have the meaning specified in Section 5(h), below. “Agreement” shall mean this Investment Agreement. “Best Bid” shall mean the highest posted bid price of the Common Stock. “Buy In” shall have the meaning specified in Section 6, below. “Buy In Adjustment Amount” shall have the meaning specified in Section6. “Closing” shall have the meaning specified in Section 2(h). “Closing Date” shall mean no more than seven (7) Trading Days followingthe Put Notice Date. “Common Stock” shall have the meaning set forth in the preamble of thisAgreement. “Control” or “Controls” shall have the meaning specified in Section 5(h). “Covering Shares” shall have the meaning specified in Section 6. “Effective Date” shall mean the date the SEC declares effective under the1933 Act the Registration Statement covering the Securities. “Environmental Laws” shall have the meaning specified in Section 4(m). “Execution Date” shall mean the date indicated in the preamble to thisAgreement. “Indemnities” shall have the meaning specified in Section 11. “Indemnified Liabilities” shall have the meaning specified in Section 11. “Ineffective Period” shall mean any period of time that the RegistrationStatement or any Supplemental Registration Statement (as defined in theRegistration Rights Agreement) becomes ineffective or unavailable for use forthe sale or resale, as applicable, of any or all of the Registrable Securities(as defined in the Registration Rights Agreement) for any reason (or in theevent the prospectus under either of the above is not current and deliverable)during any time period required under the Registration Rights Agreement. “Investor” shall have the meaning indicated in the preamble of thisAgreement. “Material Adverse Effect” shall have the meaning specified in Section4(a). “Maximum Common Stock Issuance” shall have the meaning specified inSection 2(I). “Minimum Acceptable Price” with respect to any Put Notice Date shall meanseventy-five percent (75%) of the lowest closing bid prices for the ten (10)Trading Day period immediately preceding such Put Notice Date. “Open Period” shall mean the period beginning on and including the TradingDay immediately following the Effective Date and ending on the earlier to occurof (i) the date which is thirty-six (36) months from the Effective Date; or (ii)termination of the Agreement in accordance with Section 9, below. “Pricing Period” shall mean the period beginning on the Put Notice Dateand ending on and including the date that is five (5) Trading Days after suchPut Notice Date. “Principal Market” shall mean the American Stock Exchange, Inc., theNational Association of Securities Dealers, Inc. Over-the-Counter BulletinBoard, the NASDAQ National Market System or the NASDAQ SmallCap Market,whichever is the principal market on which the Common Stock is listed. “Prospectus” shall mean the prospectus, preliminary prospectus andsupplemental prospectus used in connection with the Registration Statement. “Purchase Amount” shall mean the total amount being paid by the Investoron a particular Closing Date to purchase the Securities. “Purchase Price” shall mean ninety-five percent (95%) of the lowestclosing Best Bid price of the Common Stock during the Pricing Period. “Put Amount” shall have the meaning set forth in Section 2(b) hereof. “Put Notice” shall mean a written notice sent to the Investor by theCompany stating the Put Amount in U.S. dollars, the Company intends to sell tothe Investor pursuant to the terms of the Agreement and stating the currentnumber of Shares issued and outstanding on such date. “Put Notice Date” shall mean the Trading Day immediately following the dayon which the Investor receives a Put Notice, however a Put Notice shall bedeemed delivered on (a) the Trading Day it is received by facsimile or otherwiseby the Investor if such notice is received prior to 9:00 am Eastern Time, or (b)the immediately succeeding Trading Day if it is received by facsimile orotherwise after 9:00 am Eastern Time on a Trading Day. No Put Notice may bedeemed delivered on a day that is not a Trading Day. “Put Restriction” shall mean the days between the beginning of the PricingPeriod and Closing Date. During this time, the Company shall not be entitled todeliver another Put Notice. “Registration Period” shall have the meaning specified in Section 5(c), below. “Registration Rights Agreement” shall have the meaning set forth in therecitals, above. “Registration Statement” means the registration statement of the Companyfiled under the 1933 Act covering the Common Stock issuable hereunder. “Related Party” shall have the meaning specified in Section 5(h). “Resolution” shall have the meaning specified in Section 8(e). “SEC” shall mean the U.S. Securities & Exchange Commission. “SEC Documents” shall have the meaning specified in Section 4(f). “Securities” shall mean the shares of Common Stock issued pursuant to theterms of the Agreement. “Shares” shall mean the shares of the Company’s Common Stock. “Sold Shares” shall have the meaning specified in Section 6. “Subsidiaries” shall have the meaning specified in Section 4(a). “Trading Day” shall mean any day on which the Principal Market for theCommon Stock is open for trading, from the hours of 9:30 am until 4:00 pm. “Transaction Documents” shall mean this Agreement, the Registration RightsAgreement, and each of the other agreements entered into by the parties heretoin connection with this Agreement.SECTION 2. PURCHASE AND SALE OF COMMON STOCK.(A) PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and conditions setforth herein, the Company shall issue and sell to the Investor, and the Investorshall purchase from the Company, up to that number of Shares having an aggregatePurchase Price of Twenty-Five Million dollars ($25,000,000).(B) DELIVERY OF PUT NOTICES.(I) Subject to the terms and conditions of the Transaction Documents, and fromtime to time during the Open Period, the Company may, in its sole discretion,deliver a Put Notice to the Investor which states the Put Amount (designated inU.S. Dollars) which the Company intends to sell to the Investor on a ClosingDate. The Put Notice shall be in the form attached hereto as Exhibit F andincorporated herein by reference. The amount that the Company shall be entitledto Put to the Investor (the “Put Amount”) shall be equal to an amount up to FiveHundred Thousand dollars ($500,000) with respect to any single Put. During theOpen Period, the Company shall not be entitled to submit a Put Notice untilafter the previous Closing has been completed. The Purchase Price for the CommonStock identified in the Put Notice shall be equal to ninety-five percent (95)%of the lowest closing bid price of the Common Stock during the Pricing Period.(II) If any closing bid price during the applicable Pricing Period with respectto that Put Notice is less than Seventy-Five percent (75%) of the any closingbid prices of the Common Stock for the ten (10) Trading Days prior to the PutNotice Date (the “Minimum Acceptable Price”), the Put Notice will terminate atthe Company’s request. In the event that the closing bid price for theapplicable Pricing Period is less than the Minimum Acceptable Price, the Companymay elect, by sending written notice to the Investor to cancel the Put Notice.(C) RESERVED(D) INVESTOR’S OBLIGATION TO PURCHASE SHARES. Subject to the conditions setforth in this Agreement, following the Investor’s receipt of a validly deliveredPut Notice, the Investor shall be required to purchase from the Company duringthe related Pricing Period that number of Shares having an aggregate PurchasePrice equal to the lesser of (i) the Put Amount set forth in the Put Notice, and(ii) twenty percent (20%) of the aggregate trading volume of the Common Stockduring the applicable Pricing Period times (x) the lowest closing Best Bid priceof the Company’s Common Stock during the specified Pricing Period, but only ifsaid Shares bear no restrictive legend, are not subject to stop transferinstructions, pursuant to Section 2(h), prior to the applicable Closing Date.(E) Reserved(F) CONDITIONS TO INVESTOR’S OBLIGATION TO PURCHASE SHARES. Notwithstandinganything to the contrary in this Agreement, the Company shall not be entitled todeliver a Put Notice and the Investor shall not be obligated to purchase anyShares at a Closing (as defined in Section 2(h)) unless each of the followingconditions are satisfied:(I) a Registration Statement shall have been declared effective and shall remaineffective and available for the resale of all the Registrable Securities (asdefined in the Registration Rights Agreement) at all times until the Closingwith respect to the subject Put Notice;(II) at all times during the period beginning on the related Put Notice Date andending on and including the related Closing Date, the Common Stock shall havebeen listed on the Principal Market and shall not have been suspended fromtrading thereon for a period of two (2) consecutive Trading Days during the OpenPeriod and the Company shall not have been notified of any pending or threatenedproceeding or other action to suspend the trading of the Common Stock;(III) the Company has complied with its obligations and is otherwise not inbreach of a material provision of, or in default under, this Agreement, theRegistration Rights Agreement or any other agreement executed in connectionherewith which has not been corrected prior to delivery of the Put Notice Date;(IV) no injunction shall have been issued and remain in force, or actioncommenced by a governmental authority which has not been stayed or abandoned,prohibiting the purchase or the issuance of the Securities; and(V) the issuance of the Securities will not violate any shareholder approvalrequirements of the Principal Market.If any of the events described in clauses (i) through (v) above occurs during aPricing Period, then the Investor shall have no obligation to purchase the PutAmount of Common Stock set forth in the applicable Put Notice.(G) RESERVED(H) MECHANICS OF PURCHASE OF SHARES BY INVESTOR. Subject to thesatisfaction of the conditions set forth in Sections 2(f), 7 and 8, the closingof the purchase by the Investor of Shares (a “Closing”) shall occur on the datewhich is no later than seven (7) Trading Days following the applicable PutNotice Date (each a “Closing Date”). Prior to each Closing Date, (I) the Companyshall deliver to the Investor pursuant to this Agreement, certificatesrepresenting the Shares to be issued to the Investor on such date and registeredin the name of the Investor; and (II) the Investor shall deliver to the Companythe Purchase Price to be paid for such Shares, determined as set forth inSections 2(b) and 2(d). In lieu of delivering physical certificates representingthe Securities and provided that the Company’s transfer agent then isparticipating in The Depository Trust Company (“DTC”) Fast Automated SecuritiesTransfer (“FAST”) program, upon request of the Investor, the Company shall useits commercially reasonable efforts to cause its transfer agent toelectronically transmit the Securities by crediting the account of theInvestor’s prime broker (which shall be specified by the Investor a reasonablysufficient time in advance) with DTC through its Deposit Withdrawal AgentCommission (“DWAC”) system.The Company understands that a delay in the issuance of Securities beyond theClosing Date could result in economic loss to the Investor. After the EffectiveDate, as compensation to the Investor for such loss, the Company agrees to paylate payments to the Investor for late issuance of Securities (delivery ofSecurities after the applicable Closing Date) in accordance with the followingschedule (where “No. of Days Late” is defined as the number of trading daysbeyond the Closing Date. The Amounts are cumulative.):LATE PAYMENTFOR EACH NO.OF DAYS LATE $10,000 OF COMMON STOCK1 $ 1002 $ 2003 $ 3004 $ 4005 $ 5006 $ 6007 $ 7008 $ 8009 $ 90010 $1,000Over 10 $1,000 + $200 for each Business Day late beyond 10 daysThe Company shall pay any payments incurred under this Section in immediatelyavailable funds upon demand by the Investor. Nothing herein shall limit theInvestor’s right to pursue actual damages for the Company’s failure to issue anddeliver the Securities to the Investor, except to the extent that such latepayments shall constitute payment for and offset any such actual damages allegedby the Investor, and any Buy In Adjustment Amount.(I) OVERALL LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything containedherein to the contrary, if during the Open Period the Company becomes listed onan exchange that limits the number of shares of Common Stock that may be issuedwithout shareholder approval, then the number of Shares issuable by the Companyand purchasable by the Investor, including the shares of Common Stock issuableto the Investors, shall not exceed that number of the shares of Common Stockthat may be issuable without shareholder approval, subject to appropriateadjustment for stock splits, stock dividends, combinations or other similarrecapitalization affecting the Common Stock (the “Maximum Common StockIssuance”), unless the issuance of Shares, including any Common Stock to beissued to the Investor pursuant to Section 11(b), in excess of the MaximumCommon Stock Issuance shall first be approved by the Company’s shareholders inaccordance with applicable law and the Bylaws and Amended and RestatedCertificate of Incorporation of the Company, if such issuance of shares ofCommon Stock could cause a delisting on the Principal Market. The partiesunderstand and agree that the Company’s failure to seek or obtain suchshareholder approval shall in no way adversely affect the validity and dueauthorization of the issuance and sale of Securities or the Investor’sobligation in accordance with the terms and conditions hereof topurchase a number of Shares in the aggregate up to the Maximum Common StockIssuance limitation, and that such approval pertains only to the applicabilityof the Maximum Common Stock Issuance limitation provided in this Section 2(j).SECTION 3. INVESTOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS.The Investor represents and warrants to the Company, and covenants, that:(A) SOPHISTICATED INVESTOR. The Investor has, by reason of its business andfinancial experience, such knowledge, sophistication and experience in financialand business matters and in making investment decisions of this type that it iscapable of (I) evaluating the merits and risks of an investment in theSecurities and making an informed investment decision; (II) protecting its owninterest; and (III) bearing the economic risk of such investment for anindefinite period of time.(B) AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and validlyauthorized, executed and delivered on behalf of the Investor and is a valid andbinding agreement of the Investor enforceable against the Investor in accordancewith its terms, subject as to enforceability to general principles of equity andto applicable bankruptcy, insolvency, reorganization, moratorium, liquidationand other similar laws relating to, or affecting generally, the enforcement ofapplicable creditors’ rights and remedies.(C) SECTION 9 OF THE 1934 ACT. During the term of this Agreement, the Investorwill comply with the provisions of Section 9 of the 1934 Act, and the rulespromulgated thereunder, with respect to transactions involving the Common Stock.The Investor agrees not to short, either directly or indirectly through itsaffiliates, principals or advisors, the Company’s common stock during the termof this Agreement.(D) ACCREDITED INVESTOR. Investor is an “Accredited Investor” as that term isdefined in Rule 501(a)(3) of Regulation D of the 1933 Act.(E) NO CONFLICTS. The execution, delivery and performance of the TransactionDocuments by the Investor and the consummation by the Investor of thetransactions contemplated hereby and thereby will not result in a violation ofPartnership Agreement or other organizational documents of the Investor.(F) OPPORTUNITY TO DISCUSS. The Investor has received all materials relating tothe Company’s business, finance and operations which it has requested. TheInvestor has had an opportunity to discuss the business, management andfinancial affairs of the Company with the Company’s management.(G) INVESTMENT PURPOSES. The Investor is purchasing the Securities for its ownaccount for investment purposes and not with a view towards distribution andagrees to resell or otherwise dispose of the Securities solely in accordancewith the registration provisions of the 1933 Act (or pursuant to an exemptionfrom such registration provisions).(H) NO REGISTRATION AS A DEALER. The Investor is not and will not be required tobe registered as a “dealer” under the 1934 Act, either as a result of itsexecution and performance of its obligations under this Agreement or otherwise.(I) GOOD STANDING The Investor is a Limited Partnership, duly organized, validlyexisting and in good standing in the State of Delaware.(J) TAX LIABILITIES. The Investor understands that it is liable for its own taxliabilities.(K) REGULATION M. The Investor will comply with Regulation M under the 1934 Act,if applicable.SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.Except as set forth in the Schedules attached hereto, or as disclosed on theCompany’s SEC Documents, the Company represents and warrants to the Investorthat:(A) ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organizedand validly existing in good standing under the laws of the State of Florida,and has the requisite corporate power and authorization to own its propertiesand to carry on its business as now being conducted. Both the Company and thecompanies it owns or controls, its “Subsidiaries,” are duly qualified to dobusiness and are in good standing in every jurisdiction in which its ownershipof property or the nature of the business conducted by it makes suchqualification necessary, except to the extent that the failure to be soqualified or be in good standing would not have a Material Adverse Effect. Asused in this Agreement, “Material Adverse Effect” means any material adverseeffect on the business, properties, assets, operations, results of operations,financial condition or prospects of the Company and its Subsidiaries, if any,taken as a whole, or on the transactions contemplated hereby or by theagreements and instruments to be entered into in connection herewith, or on theauthority or ability of the Company to perform its obligations under theTransaction Documents (as defined in Section 1 and 4(b), below).(B) AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.(I) The Company has the requisite corporate power and authority to enter intoand perform this Agreement, the Registration Rights Agreement, and each of theother agreements entered into by the parties hereto in connection with thetransactions contemplated by this Agreement (collectively, the “TransactionDocuments”), and to issue the Securities in accordance with the terms hereof andthereof.(II) The execution and delivery of the Transaction Documents by the Company andthe consummation by it, of the transactions contemplated hereby and thereby,including without limitation the reservation for issuance and the issuance ofthe Securities pursuant to this Agreement, have been duly and validly authorizedby the Company’s Board of Directors and no further consent or authorization isrequired by the Company, its Board of Directors, or its shareholders.(III) The Transaction Documents have been duly and validly executed anddelivered by the Company.(IV) The Transaction Documents constitute the valid and binding obligations ofthe Company enforceable against the Company in accordance with their terms,except as such enforceability may be limited by general principles of equity orapplicable bankruptcy, insolvency, reorganization, moratorium, liquidation orsimilar laws relating to, or affecting generally, the enforcement of creditors’rights and remedies.(C) CAPITALIZATION. As of the date hereof, the authorized capital stock of theCompany consists of (i) 300,000,000 shares of Common Stock, $0.0001 par valueper share, of which as of the date hereof, 54,063,750 shares are issued andoutstanding; 20,000,000 shares of Preferred Stock authorized, $0.0001 par valueper share of which none are issued and outstanding; (as of February 4, 2005)shares reserved for issuance pursuant to options, warrants and other convertiblesecurities. All of such outstanding shares have been, or upon issuance will be,validly issued and are fully paid and nonassessable. Except as disclosed in theCompany’s publicly available filings with Periodic Filings,(I) no shares of the Company’s capital stock are subject to preemptive rights orany other similar rights or any liens or encumbrances suffered or permitted bythe Company; (II) there are no outstanding debt securities; (III) there are nooutstanding shares of capital stock, options, warrants, scrip, rights tosubscribe to, calls or commitments of any character whatsoever relating to, orsecurities or rights convertible into, any shares of capital stock of theCompany or any of its Subsidiaries, or contracts, commitments, understandings orarrangements by which the Company or any of its Subsidiaries is or may becomebound to issue additional shares of capital stock of the Company or any of itsSubsidiaries or options, warrants, scrip, rights to subscribe to, calls orcommitments of any character whatsoever relating to, or securities or rightsconvertible into, any shares of capital stock of the Company or any of itsSubsidiaries; (IV) there are no agreements or arrangements under which theCompany or any of its Subsidiaries is obligated to register the sale of any oftheir securities under the1933 Act (except the Registration Rights Agreement), (V) there are nooutstanding securities of the Company or any of its Subsidiaries which containany redemption or similar provisions, and there are no contracts, commitments,understandings or arrangements by which the Company or any of its Subsidiariesis or may become bound to redeem a security of the Company or any of itsSubsidiaries; (VI) there are no securities or instruments containinganti-dilution or similar provisions that will be triggered by the issuance ofthe Securities as described in this Agreement; (VII) the Company does not haveany stock appreciation rights or “phantom stock” plans or agreements or anysimilar plan or agreement; and (VIII) there is no dispute as to theclassification of any shares of the Company’s capital stock. The Company hasfurnished to the Investor, or the Investor has had access through EDGAR to, trueand correct copies of the Company’s Amended and Restated Certificate ofIncorporation, as in effect on the date hereof (the “Certificate ofIncorporation”), and the Company’s By-laws, as in effect on the date hereof (the”By-laws”), and the terms of all securities convertible into or exercisable forCommon Stock and the material rights of the holders thereof in respect thereto.(D) ISSUANCE OF SHARES. The Company has reserved Seventy-Five million($75,000,000) Shares for issuance pursuant to this Agreement has been dulyauthorized and reserved for issuance (subject to adjustment pursuant to theCompany’s covenant set forth in Section 5(f) below) pursuant to this Agreement.Upon issuance in accordance with this Agreement, the Securities will be validlyissued, fully paid and non-assessable and free from all taxes, liens and chargeswith respect to the issue thereof. In the event the Company cannot register asufficient number of Shares for issuance pursuant to this Agreement, the Companywill use its best efforts to authorize and reserve for issuance the number ofShares required for the Company to perform its obligations hereunder as soon asreasonably practicable.(E) NO CONFLICTS. The execution, delivery and performance of the TransactionDocuments by the Company and the consummation by the Company of the transactionscontemplated hereby and thereby will not (I) result in a violation of theCertificate of Incorporation, any Certificate of Designations, Preferences andRights of any outstanding series of preferred stock of the Company or theBy-laws; or (II) conflict with, or constitute a material default (or an eventwhich with notice or lapse of time or both would become a material default)under, or give to others any rights of termination, amendment, acceleration orcancellation of, any material agreement, contract, indenture mortgage,indebtedness or instrument to which the Company or any of its Subsidiaries is aparty, or to the Company’s knowledge result in a violation of any law, rule,regulation, order, judgment or decree (including United States federal and statesecurities laws and regulations and the rules and regulations of the PrincipalMarket or principal securities exchange or trading market on which the CommonStock is traded or listed) applicable to the Company or any of its Subsidiariesor by which any property or asset of the Company or any of its Subsidiaries isbound or affected. Except as disclosed in Schedule 4(e), neitherthe Company nor its Subsidiaries is in violation of any term of, or in defaultunder, the Certificate of Incorporation, any Certificate of Designations,Preferences and Rights of any outstanding series of preferred stock of theCompany or the Bylaws or their organizational charter or by-laws, respectively,or any contract, agreement, mortgage, indebtedness, indenture, instrument,judgment, decree or order or any statute, rule or regulation applicable to theCompany or its Subsidiaries, except for possible conflicts, defaults,terminations, amendments, accelerations, cancellations and violations that wouldnot individually or in the aggregate have a Material Adverse Effect. Thebusiness of the Company and its Subsidiaries is not being conducted, and shallnot be conducted, in violation of any law, statute, ordinance, rule, order orregulation of any governmental authority or agency, regulatory orself-regulatory agency, or court, except for possible violations the sanctionsfor which either individually or in the aggregate would not have a MaterialAdverse Effect. Except as specifically contemplated by this Agreement and asrequired under the 1933 Act to the Company’s knowledge, the Company is notrequired to obtain any consent, authorization, permit or order of, or make anyfiling or registration (except the filing of a registration statement) with, anycourt, governmental authority or agency, regulatory or self-regulatory agency orother third party in order for it to execute, deliver or perform any of itsobligations under, or contemplated by, the Transaction Documents in accordancewith the terms hereof or thereof. All consents, authorizations, permits, orders,filings and registrations which the Company is required to obtain pursuant tothe preceding sentence have been obtained or effected on or prior to the datehereof and are in full force and effect as of the date hereof. Except asdisclosed in Schedule 4(e), the Company and its Subsidiaries are unaware of anyfacts or circumstances which might give rise to any of the foregoing. TheCompany is not, and will not be, in violation of the listing requirements of thePrincipal Market as in effect on the date hereof and on each of the ClosingDates and is not aware of any facts which would reasonably lead to delisting ofthe Common Stock by the Principal Market in the foreseeable future.(F) SEC DOCUMENTS; FINANCIAL STATEMENTS. As of February 4, 2005 the Company hasfiled all reports, schedules, forms, statements and other documents required tobe filed by it with the SEC pursuant to the reporting requirements of the 1934Act (all of the foregoing filed prior to the date hereof and all exhibitsincluded therein and financial statements and schedules thereto and documentsincorporated by reference therein being hereinafter referred to as the “SECDocuments”). The Company has delivered to the Investor or its representatives,or they have had access through EDGAR to, true and complete copies of the SECDocuments. As of their respective dates, the SEC Documents complied in allmaterial respects with the requirements of the 1934 Act and the rules andregulations of the SEC promulgated thereunder applicable to the SEC Documents,and none of the SEC Documents, at the time they were filed with the SEC,contained any untrue statement of a material fact or omitted to state a materialfact required to be stated therein or necessary to make the statements therein,in light of the circumstances under which they were made, notmisleading. As of their respective dates, the financial statements of theCompany included in the SEC Documents complied as to form in all materialrespects with applicable accounting requirements and the published rules andregulations of the SEC with respect thereto. Such financial statements have beenprepared in accordance with generally accepted accounting principles, by a firmthat is a member of the Public Companies Accounting Oversight Board (“PCAOB”)consistently applied, during the periods involved (except (I) as may beotherwise indicated in such financial statements or the notes thereto, or (II)in the case of unaudited interim statements, to the extent they may excludefootnotes or may be condensed or summary statements) and fairly present in allmaterial respects the financial position of the Company as of the dates thereofand the results of its operations and cash flows for the periods then ended(subject, in the case of unaudited statements, to normal year-end auditadjustments). No other written information provided by or on behalf of theCompany to the Investor which is not included in the SEC Documents, including,without limitation, information referred to in Section 4(d) of this Agreement,contains any untrue statement of a material fact or omits to state any materialfact necessary to make the statements therein, in the light of the circumstanceunder which they are or were made, not misleading. Neither the Company nor anyof its Subsidiaries or any of their officers, directors, employees or agentshave provided the Investor with any material, nonpublic information which wasnot publicly disclosed prior to the date hereof and any material, nonpublicinformation provided to the Investor by the Company or its Subsidiaries or anyof their officers, directors, employees or agents prior to any Closing Dateshall be publicly disclosed by the Company prior to such Closing Date.(G) ABSENCE OF CERTAIN CHANGES. Except as set forth in the SEC Documents, theCompany does not intend to change the business operations of the Company in anymaterial way. The Company has not taken any steps, and does not currently expectto take any steps, to seek protection pursuant to any bankruptcy law nor doesthe Company or its Subsidiaries have any knowledge or reason to believe that itscreditors intend to initiate involuntary bankruptcy proceedings.(H) ABSENCE OF LITIGATION. Except as set forth in the SEC Documents, there is noaction, suit, proceeding, inquiry or investigation before or by any court,public board, government agency, self-regulatory organization or body pendingor, to the knowledge of the executive officers of Company or any of itsSubsidiaries, threatened against or affecting the Company, the Common Stock orany of the Company’s Subsidiaries or any of the Company’s or the Company’sSubsidiaries’ officers or directors in their capacities as such, in which anadverse decision could have a Material Adverse Effect.(I) ACKNOWLEDGMENT REGARDING INVESTOR’S PURCHASE OF SHARES. The Companyacknowledges and agrees that the Investor is acting solely in the capacity ofarm’s length purchaser with respect to the Transaction Documents and thetransactions contemplated hereby and thereby. TheCompany further acknowledges that the Investor is not acting as a financialadvisor or fiduciary of the Company (or in any similar capacity) with respect tothe Transaction Documents and the transactions contemplated hereby and therebyand any advice given by the Investor or any of its respective representatives oragents in connection with the Transaction Documents and the transactionscontemplated hereby and thereby is merely incidental to the Investor’s purchaseof the Securities. The Company further represents to the Investor that theCompany’s decision to enter into the Transaction Documents has been based solelyon the independent evaluation by the Company and its representatives.(J) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except asset forth in the SEC Documents, since February 5, 2005 no event, liability,development or circumstance has occurred or exists, or to the Company’sknowledge is contemplated to occur, with respect to the Company or itsSubsidiaries or their respective business, properties, assets, prospects,operations or financial condition, that would be required to be disclosed by theCompany under applicable securities laws on a registration statement filed withthe SEC relating to an issuance and sale by the Company of its Common Stock andwhich has not been publicly announced.(K) EMPLOYEE RELATIONS. Neither the Company nor any of its Subsidiaries isinvolved in any union labor dispute nor, to the knowledge of the Company or anyof its Subsidiaries, is any such dispute threatened. Neither the Company nor anyof its Subsidiaries is a party to a collective bargaining agreement, and theCompany and its Subsidiaries believe that relations with their employees aregood. No executive officer (as defined in Rule 501(f) of the 1933 Act) hasnotified the Company that such officer intends to leave the Company’s employ orotherwise terminate such officer’s employment with the Company.(L) INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own orpossess adequate rights or licenses to use all trademarks, trade names, servicemarks, service mark registrations, service names, patents, patent rights,copyrights, inventions, licenses, approvals, governmental authorizations, tradesecrets and rights necessary to conduct their respective businesses as nowconducted. Except as set forth in the SEC Documents, none of the Company’strademarks, trade names, service marks, service mark registrations, servicenames, patents, patent rights, copyrights, inventions, licenses, approvals,government authorizations, trade secrets or other intellectual property rightsnecessary to conduct its business as now or as proposed to be conducted haveexpired or terminated, or are expected to expire or terminate within two (2)years from the date of this Agreement. The Company and its Subsidiaries do nothave any knowledge of any infringement by the Company or its Subsidiaries oftrademark, trade name rights, patents, patent rights, copyrights, inventions,licenses, service names, service marks, service mark registrations, trade secretor other similar rights of others, or of any such development of similar oridentical trade secrets or technical information by others and, except as setforth in theSEC Documents, there is no claim, action or proceeding being made or broughtagainst, or to the Company’s knowledge, being threatened against, the Company orits Subsidiaries regarding trademark, trade name, patents, patent rights,invention, copyright, license, service names, service marks, service markregistrations, trade secret or other infringement; and the Company and itsSubsidiaries are unaware of any facts or circumstances which might give rise toany of the foregoing. The Company and its Subsidiaries have taken commerciallyreasonable security measures to protect the secrecy, confidentiality and valueof all of their intellectual properties.(M) ENVIRONMENTAL LAWS. The Company and its Subsidiaries (I) are, to theknowledge of management of the Company, in compliance with any and allapplicable foreign, federal, state and local laws and regulations relating tothe protection of human health and safety, the environment or hazardous or toxicsubstances or wastes, pollutants or contaminants (“Environmental Laws”); (II)have, to the knowledge of management of the Company, received all permits,licenses or other approvals required of them under applicable Environmental Lawsto conduct their respective businesses; and (III) are in compliance, to theknowledge of the Company, with all terms and conditions of any such permit,license or approval where, in each of the three (3) foregoing cases, the failureto so comply would have, individually or in the aggregate, a Material AdverseEffect.(N) TITLE. The Company and its Subsidiaries have good and marketable title toall personal property owned by them which is material to the business of theCompany and its Subsidiaries, in each case free and clear of all liens,encumbrances and defects except such as are described in the SEC Documents orsuch as do not materially affect the value of such property and do not interferewith the use made and proposed to be made of such property by the Company or anyof its Subsidiaries. Any real property and facilities held under lease by theCompany or any of its Subsidiaries are held by them under valid, subsisting andenforceable leases with such exceptions as are not material and do not interferewith the use made and proposed to be made of such property and buildings by theCompany and its Subsidiaries.(O) INSURANCE. Each of the Company’s Subsidiaries are insured by insurers ofrecognized financial responsibility against such losses and risks and in suchamounts as management of the Company reasonably believes to be prudent andcustomary in the businesses in which the Company and its Subsidiaries areengaged. Neither the Company nor any such Subsidiary has been refused anyinsurance coverage sought or applied for and neither the Company nor any suchSubsidiary has any reason to believe that it will not be able to renew itsexisting insurance coverage as and when such coverage expires or to obtainsimilar coverage from similar insurers as may be necessary to continue itsbusiness at a cost that would not have a Material Adverse Effect.(P) REGULATORY PERMITS. The Company and its Subsidiaries have in full force andeffect all certificates, approvals, authorizations and permits from theappropriate federal, state, local or foreign regulatory authorities andcomparable foreign regulatory agencies, necessary to own, lease or operate theirrespective properties and assets and conduct their respective businesses, andneither the Company nor any such Subsidiary has received any notice ofproceedings relating to the revocation or modification of any such certificate,approval, authorization or permit, except for such certificates, approvals,authorizations or permits which if not obtained, or such revocations ormodifications which, would not have a Material Adverse Effect.(Q) INTERNAL ACCOUNTING CONTROLS. The Company and each of its Subsidiariesmaintain a system of internal accounting controls sufficient to providereasonable assurance that (I) transactions are executed in accordance withmanagement’s general or specific authorizations; (II) transactions are recordedas necessary to permit preparation of financial statements in conformity withgenerally accepted accounting principles by a firm with membership to the PCAOBand to maintain asset accountability; (III) access to assets is permitted onlyin accordance with management’s general or specific authorization; and (IV) therecorded accountability for assets is compared with the existing assets atreasonable intervals and appropriate action is taken with respect to anydifferences.(R) NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor any of itsSubsidiaries is subject to any charter, corporate or other legal restriction, orany judgment, decree, order, rule or regulation which in the judgment of theCompany’s officers has or is expected in the future to have a Material AdverseEffect. Neither the Company nor any of its Subsidiaries is a party to anycontract or agreement which in the judgment of the Company’s officers has or isexpected to have a Material Adverse Effect.(S) TAX STATUS. The Company and each of its Subsidiaries has made or filed allUnited States federal and state income and all other tax returns, reports anddeclarations required by any jurisdiction to which it is subject (unless andonly to the extent that the Company and each of its Subsidiaries has set asideon its books provisions reasonably adequate for the payment of all unpaid andunreported taxes) and has paid all taxes and other governmental assessments andcharges that are material in amount, shown or determined to be due on suchreturns, reports and declarations, except those being contested in good faithand has set aside on its books provision reasonably adequate for the payment ofall taxes for periods subsequent to the periods to which such returns, reportsor declarations apply. There are no unpaid taxes in any material amount claimedto be due by the taxing authority of any jurisdiction, and the officers of theCompany know of no basis for any such claim.(T) CERTAIN TRANSACTIONS. Except as set forth in the SEC Documents filed atleast ten (10) days prior to the date hereof and except for arm’s lengthtransactions pursuant to which the Company makes payments in the ordinary courseof business upon terms no less favorable than the Company could obtainfrom third parties and other than the grant of stock options disclosed in theSEC Documents, none of the officers, directors, or employees of the Company ispresently a party to any transaction with the Company or any of its Subsidiaries(other than for services as employees, officers and directors), including anycontract, agreement or other arrangement providing for the furnishing ofservices to or by, providing for rental of real or personal property to or from,or otherwise requiring payments to or from any officer, director or suchemployee or, to the knowledge of the Company, any corporation, partnership,trust or other entity in which any officer, director, or any such employee has asubstantial interest or is an officer, director, trustee or partner.(U) DILUTIVE EFFECT. The Company understands and acknowledges that the number ofshares of Common Stock issuable upon purchases pursuant to this Agreement willincrease in certain circumstances including, but not necessarily limited to, thecircumstance wherein the trading price of the Common Stock declines during theperiod between the Effective Date and the end of the Open Period. The Company’sexecutive officers and directors have studied and fully understand the nature ofthe transactions contemplated by this Agreement and recognize that they have apotential dilutive effect. The Board of Directors of the Company has concluded,in its good faith business judgment, that such issuance is in the best interestsof the Company. The Company specifically acknowledges that, subject to suchlimitations as are expressly set forth in the Transaction Documents, itsobligation to issue shares of Common Stock upon purchases pursuant to thisAgreement is absolute and unconditional regardless of the dilutive effect thatsuch issuance may have on the ownership interests of other shareholders of theCompany.(V) RIGHT OF FIRST REFUSAL. The Company shall not, directly or indirectly,without the prior written consent of Investor which will not be unreasonablywithheld, offer, sell, grant any option to purchase, or otherwise dispose of (orannounce any offer, sale, grant or any option to purchase or other disposition)any of its Common Stock or securities convertible into Common Stock at a pricethat is less than the market price of the Common Stock at the time of issuanceof such security or investment (a “Subsequent Financing”) for a period of one(1) year after the Effective Date, except (I) the granting of options orwarrants to employees, officers, directors and consultants, and the issuance ofshares upon exercise of options granted, under any stock option plan heretoforeor hereafter duly adopted by the Company or for services rendered or to berendered; (II) shares issued upon exercise of any currently outstanding warrantsor options and upon conversion of any currently outstanding convertibledebenture or convertible preferred stock, in each case disclosed pursuant toSection 4(c); (III) securities issued in connection with the capitalization orcreation of a joint venture with a strategic partner; (IV) shares issued to paypart or all of the purchase price for the acquisition by the Company of anotherentity (which, for purposes of this clause (iv), shall not include an individualor group of individuals); and (V) shares issued in a bona fide public offeringby the Company of its securities, unless (A) the Company delivers to Investor awritten notice (the”Subsequent Financing Notice”) of its intention to effect such SubsequentFinancing, which Subsequent Financing Notice shall describe in reasonable detailthe proposed terms of such Subsequent Financing, the amount of proceeds intendedto be raised thereunder, the person with whom such Subsequent Financing shall beeffected, and attached to which shall be a term sheet or similar documentrelating thereto; and (B) Investor shall not have notified the Company by 5:00p.m. (Eastern Time) on the fifth Trading Day after its receipt of the SubsequentFinancing Notice of its willingness to provide, subject to completion ofmutually acceptable documentation, financing to the Company on substantially theterms set forth in the Subsequent Financing Notice; (VI) to enter into a loan,credit or lease facility with a bank or financing institution. If Investor shallfail to notify the Company of its intention to enter into such negotiationswithin such time period, then the Company may effect the Subsequent Financingsubstantially upon the terms set forth in the Subsequent Financing Notice;provided that the Company shall provide Investor with a second SubsequentFinancing Notice, and Investor shall again have the right of first refusal setforth above in this Section, if the Subsequent Financing subject to the initialSubsequent Financing Notice shall not have been consummated for any reason onthe terms set forth in such Subsequent Financing Notice within thirty TradingDays after the date of the initial Subsequent Financing Notice. The rightsgranted to Investor in this Section are not subject to any prior right of firstrefusal given to any other person disclosed on Schedule 4(c).(W) LOCK-UP. The Company shall cause its officers, insiders, directors, andaffiliates or other related parties under control of the Company, to refrainfrom selling Common Stock during each Pricing Period.(X) NO GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, norany person acting on its behalf, has engaged in any form of general solicitationor general advertising (within the meaning of Regulation D) in connection withthe offer or sale of the Common Stock offered hereby.(Y) NO BROKERS, FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS will bepayable by the Company with respect to the transactions contemplated by thisAgreement, other than disclosed in this Agreement.SECTION 5. COVENANTS OF THE COMPANY(A) BEST EFFORTS. The Company shall use commercially reasonable efforts timelyto satisfy each of the conditions to be satisfied by it as provided in Section 7of this Agreement.(B) BLUE SKY. The Company shall, at its sole cost and expense, on or before eachof the Closing Dates, take such action as the Company shall reasonably determineis necessary to qualify the Securities for, or obtain exemption for theSecurities for, sale to the Investor at each of the Closings pursuant to thisAgreement under applicable securities or “Blue Sky” laws of such states of theUnited States, as reasonably specified by Investor, and shall provide evidenceof any such action so taken to the Investor on or prior to the Closing Date.(C) REPORTING STATUS. Until the earlier to occur of (I) the first date which isafter the date this Agreement is terminated pursuant to Section 9 and on whichthe Holders (as that term is defined in the Registration Rights Agreement) maysell all of the Securities without restriction pursuant to Rule 144(k)promulgated under the 1933 Act (or successor thereto); and (II) the date onwhich (A) the Holders shall have sold all the Securities; and (B) this Agreementhas been terminated pursuant to Section 9 (the “Registration Period”), theCompany shall file all reports required to be filed with the SEC pursuant to the1934 Act, and the Company shall not terminate its status as a reporting companyunder the 1934 Act.(D) USE OF PROCEEDS. The Company will use the proceeds from the sale of theShares (excluding amounts paid by the Company for fees as set forth in theTransaction Documents) for general corporate and working capital purposes andacquisitions or assets, businesses or operations or for other purposes that theBoard of Directors deem to be in the best interest of the Company.(E) FINANCIAL INFORMATION. The Company agrees to make available to the Investorvia EDGAR or other electronic means the following to the Investor during theRegistration Period: (I) within five (5) Trading Days after the filing thereofwith the SEC, a copy of its Annual Reports on Form 10-KSB, its Quarterly Reportson Form 10-QSB, any Current Reports on Form 8-K and any Registration Statementsor amendments filed pursuant to the 1933 Act; (II) on the same day as therelease thereof, facsimile copies of all press releases issued by the Company orany of its Subsidiaries; (III) copies of any notices and other information madeavailable or given to the shareholders of the Company generally,contemporaneously with the making available or giving thereof to theshareholders; and (IV) within two (2) calendar days of filing or deliverythereof, copies of all documents filed with, and all correspondence sent to, thePrincipal Market, any securities exchange or market, or the National Associationof Securities Dealers, Inc., unless such information is material nonpublicinformation.(F) RESERVATION OF SHARES. Subject to the following sentence, the Company shalltake all action necessary to at all times have authorized, and reserved for thepurpose of issuance, a sufficient number of shares of Common Stock to providefor the issuance of the Securities hereunder. In the event that the Companydetermines that it does not have a sufficient number of authorized shares ofCommon Stock to reserve and keep available for issuance as described in thisSection 5(f), the Company shall use its best efforts to increase the number ofauthorized shares of Common Stock by seeking shareholder approval for theauthorization of such additional shares.(G) LISTING. The Company shall promptly secure and maintain the listing of allof the Registrable Securities (as defined in the Registration Rights Agreement)upon the Principal Market and each other national securities exchange andautomated quotation system, if any, upon which shares of Common Stock are thenlisted (subject to official notice of issuance) and shall maintain, such listingof all Registrable Securities from time to time issuable under the terms of theTransaction Documents. Neither the Company nor any of its Subsidiaries shalltake any action which would be reasonably expected to result in the delisting orsuspension of the Common Stock on the Principal Market (excluding suspensions ofnot more than one (1) trading day resulting from business announcements by theCompany). The Company shall promptly provide to the Investor copies of anynotices it receives from the Principal Market regarding the continuedeligibility of the Common Stock for listing on such automated quotation systemor securities exchange. The Company shall pay all fees and expenses inconnection with satisfying its obligations under this Section 5(g).(H) TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall cause each ofits Subsidiaries not to, enter into, amend, modify or supplement, or permit anySubsidiary to enter into, amend, modify or supplement, any agreement,transaction, commitment or arrangement with any of its or any Subsidiary’sofficers, directors, persons who were officers or directors at any time duringthe previous two (2) years, shareholders who beneficially own 5% or more of theCommon Stock, or affiliates or with any individual related by blood, marriage oradoption to any such individual or with any entity in which any such entity orindividual owns a 5% or more beneficial interest (each a “Related Party”),except for (I) customary employment arrangements and benefit programs onreasonable terms, (II) any agreement, transaction, commitment or arrangement onan arms-length basis on terms no less favorable than terms which would have beenobtainable from a person other than such Related Party, or (III) any agreement,transaction, commitment or arrangement which is approved by a majority of thedisinterested directors of the Company. For purposes hereof, any director who isalso an officer of the Company or any Subsidiary of the Company shall not be adisinterested director with respect to any such agreement, transaction,commitment or arrangement. “Affiliate” for purposes hereof means, with respectto any person or entity, another person or entity that, directly or indirectly,(I) has a 5% or more equity interest in that person or entity, (II) has 5% ormore common ownership with that person or entity, (III) controls that person orentity, or (IV) is under common control with that person or entity. “Control” or”Controls” for purposes hereof means that a person or entity has the power,direct or indirect, to conduct or govern the policies of another person orentity.(I) FILING OF FORM 8-K. On or before the date which is three (3) Trading Daysafter the Execution Date, the Company shall file a Current Report on Form 8-Kwith the SEC describing the terms of the transaction contemplated by theTransaction Documents in the form required by the 1934 Act, if such filing isrequired.(J) CORPORATE EXISTENCE. The Company shall use its best efforts to preserve andcontinue the corporate existence of the Company.(K) NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKEA PUT. The Company shall promptly notify Investor upon the occurrence of any ofthe following events in respect of a Registration Statement or relatedprospectus in respect of an offering of the Securities: (I) receipt of anyrequest for additional information by the SEC or any other federal or stategovernmental authority during the period of effectiveness of the RegistrationStatement for amendments or supplements to the Registration Statement or relatedprospectus; (II) the issuance by the SEC or any other federal or stategovernmental authority of any stop order suspending the effectiveness of anyRegistration Statement or the initiation of any proceedings for that purpose;(III) receipt of any notification with respect to the suspension of thequalification or exemption from qualification of any of the Securities for salein any jurisdiction or the initiation or notice of any proceeding for suchpurpose; (IV) the happening of any event that makes any statement made in suchRegistration Statement or related prospectus or any document incorporated ordeemed to be incorporated therein by reference untrue in any material respect orthat requires the making of any changes in the Registration Statement, relatedprospectus or documents so that, in the case of a Registration Statement, itwill not contain any untrue statement of a material fact or omit to state anymaterial fact required to be stated therein or necessary to make the statementstherein not misleading, and that in the case of the related prospectus, it willnot contain any untrue statement of a material fact or omit to state anymaterial fact required to be stated therein or necessary to make the statementstherein, in the light of the circumstances under which they were made, notmisleading; and (V) the Company’s reasonable determination that a post-effectiveamendment to the Registration Statement would be appropriate, and the Companyshall promptly make available to Investor any such supplement or amendment tothe related prospectus. The Company shall not deliver to Investor any Put Noticeduring the continuation of any of the foregoing events.(L) REIMBURSEMENT. If (I) Investor becomes involved in any capacity in anyaction, proceeding or investigation brought by any shareholder of the Company,in connection with or as a result of the consummation of the transactionscontemplated by the Transaction Documents, or if Investor is impleaded in anysuch action, proceeding or investigation by any person (other than as a resultof a breach of the Investor’s representations and warranties set forth in thisAgreement); or (II)Investor becomes involved in any capacity in any action,proceeding or investigation brought by the SEC against or involving the Companyor in connection with or as a result of the consummation of the transactionscontemplated by the Transaction Documents (other than as a result of a breach ofthe Investor’s representations and warranties set forth in this Agreement), orif Investor is impleaded in any such action, proceeding or investigation by anyperson, then in any such case, the Company will reimburse Investor for itsreasonable legal and other expenses (including the cost of anyinvestigation and preparation) incurred in connection therewith, as suchexpenses are incurred. In addition, other than with respect to any matter inwhich Investor is a named party, the Company will pay to Investor the charges,as reasonably determined by Investor, for the time of any officers or employeesof Investor devoted to appearing and preparing to appear as witnesses, assistingin preparation for hearings, trials or pretrial matters, or otherwise withrespect to inquiries, hearing, trials, and other proceedings relating to thesubject matter of this Agreement. The reimbursement obligations of the Companyunder this section shall be in addition to any liability which the Company mayotherwise have, shall extend upon the same terms and conditions to anyaffiliates of Investor that are actually named in such action, proceeding orinvestigation, and partners, directors, agents, employees, attorneys,accountants, auditors and controlling persons (if any), as the case may be, ofInvestor and any such affiliate, and shall be binding upon and inure to thebenefit of any successors of the Company, Investor and any such affiliate andany such person.SECTION 6. COVER.If the number of Shares represented by any Put Notice (s) become restricted orare no longer freely trading for any reason, and after the applicable ClosingDate, the Investor purchases, in an open market transaction or otherwise, theCompany’s Common Stock (the “Covering Shares”) in order to make delivery insatisfaction of a sale of Common Stock by the Investor (the “Sold Shares”),which delivery such Investor anticipated to make using the Shares represented bythe Put Notice (a “Buy-In”), the Company shall pay to the Investor the Buy-InAdjustment Amount (as defined below). The “Buy-In Adjustment Amount” is theamount equal to the excess, if any, of (A) the Investor’s total purchase price(including brokerage commissions, if any) for the Covering Shares over (B) thenet proceeds (after brokerage commissions, if any) received by the Investor fromthe sale of the Sold Shares. The Company shall pay the Buy-In Adjustment Amountto the Investor in immediately available funds immediately upon demand by theInvestor. By way of illustration and not in limitation of the foregoing, if theInvestor purchases Common Stock having a total purchase price (includingbrokerage commissions) of $11,000 to cover a Buy-In with respect to the CommonStock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount whichthe Company will be required to pay to the Investor will be $1,000.SECTION 7. CONDITIONS OF THE COMPANY’S OBLIGATION TO SELL.The obligation hereunder of the Company to issue and sell the Securities to theInvestor is further subject to the satisfaction, at or before each Closing Date,of each of the following conditions set forth below. These conditions are forthe Company’s sole benefit and may be waived by the Company at any time in itssole discretion.(A) The Investor shall have executed each of this Agreement and the RegistrationRights Agreement and delivered the same to the Company.(B) The Investor shall have delivered to the Company the Purchase Price for theSecurities being purchased by the Investor between the end of the Pricing Periodand the Closing Date via a Put Settlement Sheet (hereto attached as Exhibit G)After receipt of confirmation of delivery of such Securities to the Investor,the Investor, by wire transfer of immediately available funds pursuant to thewire instructions provided by the Company will disburse the funds constitutingthe Purchase Amount.(C) No statute, rule, regulation, executive order, decree, ruling or injunctionshall have been enacted, entered, promulgated or endorsed by any court orgovernmental authority of competent jurisdiction which prohibits theconsummation of any of the transactions contemplated by this Agreement.SECTION 8. FURTHER CONDITIONS OF THE INVESTOR’S OBLIGATION TO PURCHASE.The obligation of the Investor hereunder to purchase Shares is subject to thesatisfaction, on or before each Closing Date, of each of the followingconditions set forth below.(A) The Company shall have executed each of the Transaction Documents anddelivered the same to the Investor.(B) The Common Stock shall be authorized for quotation on the Principal Marketand trading in the Common Stock shall not have been suspended by the PrincipalMarket or the SEC, at any time beginning on the date hereof and through andincluding the respective Closing Date (excluding suspensions of not more thanone (1) Trading Day resulting from business announcements by the Company,provided that such suspensions occur prior to the Company’s delivery of the PutNotice related to such Closing).(C) The representations and warranties of the Company shall be true and correctas of the date when made and as of the applicable Closing Date as though made atthat time (except for (I) representations and warranties that speak as of aspecific date and (II) with respect to the representations made in Sections4(g), (h) and (j) and the third sentence of Section 4(k) hereof, events whichoccur on or after the date of this Agreement and are disclosed in SEC filingsmade by the Company at least ten (10) Trading Days prior to the applicable PutNotice Date) and the Company shall have performed, satisfied and complied withthe covenants, agreements and conditions required by the Transaction Documentsto be performed, satisfied or complied with by the Company on or before suchClosing Date. The Investor may request an update as of such Closing Dateregarding the representation contained in Section 4(c) above.(D) The Company shall have executed and delivered to the Investor thecertificates representing, or have executed electronic book-entry transfer of,theSecurities (in such denominations as such Investor shall request) beingpurchased by the Investor at such Closing.(E) The Board of Directors of the Company shall have adopted resolutionsconsistent with Section 4(b)(ii) above (the “Resolutions”) and such Resolutionsshall not have been amended or rescinded prior to such Closing Date.(F) reserved(G) No statute, rule, regulation, executive order, decree, ruling or injunctionshall have been enacted, entered, promulgated or endorsed by any court orgovernmental authority of competent jurisdiction which prohibits theconsummation of any of the transactions contemplated by this Agreement.(H) The Registration Statement shall be effective on each Closing Date and nostop order suspending the effectiveness of the Registration statement shall bein effect or to the Company’s knowledge shall be pending or threatened.Furthermore, on each Closing Date (I) neither the Company nor Investor shallhave received notice that the SEC has issued or intends to issue a stop orderwith respect to such Registration Statement or that the SEC otherwise hassuspended or withdrawn the effectiveness of such Registration Statement, eithertemporarily or permanently, or intends or has threatened to do so (unless theSEC’s concerns have been addressed and Investor is reasonably satisfied that theSEC no longer is considering or intends to take such action), and (II) no othersuspension of the use or withdrawal of the effectiveness of such RegistrationStatement or related prospectus shall exist.(I) At the time of each Closing, the Registration Statement (includinginformation or documents incorporated by reference therein) and any amendmentsor supplements thereto shall not contain any untrue statement of a material factor omit to state any material fact required to be stated therein or necessary tomake the statements therein not misleading or which would require publicdisclosure or an update supplement to the prospectus.(J) If applicable, the shareholders of the Company shall have approved theissuance of any Shares in excess of the Maximum Common Stock Issuance inaccordance with Section 2(i) or the Company shall have obtained appropriateapproval pursuant to the requirements of Florida law and the Company’s Articlesof Incorporation and By-laws.(K) The conditions to such Closing set forth in Section 2(f) shall have beensatisfied on or before such Closing Date.(L) The Company shall have certified to the Investor the number of Shares ofCommon Stock outstanding when a Put Notice is given to the Investor.SECTION 9. TERMINATION. This Agreement shall terminate upon any of the followingevents:(I) when the Investor has purchased an aggregate of Twenty-Five Million dollars($25,000,000) in the Common Stock of the Company pursuant to this Agreement;(II) on the date which is thirty-six (36) months after the Effective Date;SECTION 10. SUSPENSIONThis Agreement shall be suspended upon any of the following events, and shallremain suspended until such event is rectified: (I) the trading of the Common Stock is suspended by the SEC, the PrincipalMarket or the NASD for a period of two (2) consecutive Trading Days during theOpen Period; (II) The Common Stock ceases to be registered under the 1934 Act or listedor traded on the Principal Market. Upon the occurrence of one (1) of theabove-described events, the Company shall send written notice of such event tothe Investor.SECTION 11. INDEMNIFICATION.In consideration of the parties mutual obligations set forth In the TransactionDocuments, each of the parties (in such capacity, an “Indemnitor”) shall defend,protect, indemnify and hold harmless the other and all of the other party’sshareholders, officers, directors, employees, counsel, and direct or indirectinvestors and any of the foregoing person’s agents or other representatives(including, without limitation, those retained in connection with thetransactions contemplated by this Agreement) (collectively, the “Indemnitees”)from and against any and all actions, causes of action, suits, claims, losses,costs, penalties, fees, liabilities and damages, and reasonable expenses inconnection therewith (irrespective of whether any such Indemnitee is a party tothe action for which indemnification hereunder is sought), and includingreasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),incurred by any Indemnitee as a result of, or arising out of, or relating to (I)any misrepresentation or breach of any representation or warranty made by theIndemnitor or any other certificate, instrument or document contemplated herebyor thereby; (II) any breach of any covenant, agreement or obligation of theIndemnitor contained in the Transaction Documents or any other certificate,instrument or document contemplated hereby or thereby; or (III) any cause ofaction, suit or claim brought or made against such Indemnitee by a third partyand arising out of or resulting from the execution, delivery, performance orenforcement of the Transaction Documents or any other certificate, instrument ordocument contemplated hereby or thereby, except insofar as any suchmisrepresentation, breach or any untrue statement, alleged untrue statement,omission or alleged omission is made inreliance upon and in conformity with information furnished to Indemnitor whichis specifically intended for use in the preparation of any such RegistrationStatement, preliminary prospectus, prospectus or amendments to the prospectus.To the extent that the foregoing undertaking by the Indemnitor may beunenforceable for any reason, the Indemnitor shall make the maximum contributionto the payment and satisfaction of each of the Indemnified Liabilities which ispermissible under applicable law. The indemnity provisions contained hereinshall be in addition to any cause of action or similar rights Indemnitor mayhave, and any liabilities the Indemnitor or the Indemnitees may be subject to.SECTION 12. GOVERNING LAW; MISCELLANEOUS.(A) GOVERNING LAW. This Agreement shall be governed by and interpreted inaccordance with the laws of the Commonwealth of Massachusetts without regard tothe principles of conflict of laws. Each party hereby irrevocably submits to theexclusive jurisdiction of the state and federal courts sitting in the City ofBoston, County of Suffolk, for the adjudication of any dispute hereunder or inconnection herewith or with any transaction contemplated hereby or discussedherein, and hereby irrevocably waives, and agrees not to assert in any suit,action or proceeding, any claim that it is not personally subject to thejurisdiction of any such court, that such suit, action or proceeding is broughtin an inconvenient forum or that the venue of such suit, action or proceeding isimproper. Each party hereby irrevocably waives personal service of process andconsents to process being served in any such suit, action or proceeding bymailing a copy thereof to such party at the address for such notices to it underthis Agreement and agrees that such service shall constitute good and sufficientservice of process and notice thereof. Nothing contained herein shall be deemedto limit in any way any right to serve process in any manner permitted by law.If any provision of this Agreement shall be invalid or unenforceable in anyjurisdiction, such invalidity or unenforceability shall not affect the validityor enforceability of the remainder of this Agreement in that jurisdiction or thevalidity or enforceability of any provision of this Agreement in any otherjurisdiction.(B) LEGAL FEES; AND MISCELLANEOUS FEES. Except as otherwise set forth in theTransaction Documents, each party shall pay the fees and expenses of itsadvisers, counsel, the accountants and other experts, if any, and all otherexpenses incurred by such party incident to the negotiation, preparation,execution, delivery and performance of this Agreement. Any attorneys’ fees andexpenses incurred by either the Company or by the Investor in connection withthe preparation, negotiation, execution and delivery of any amendments to thisAgreement or relating to the enforcement of the rights of any party, after theoccurrence of any breach of the terms of this Agreement by another party or anydefault by another party in respect of the transactions contemplated hereunder,shall be paid on demand by the party which breached the Agreement and/ordefaulted, as the case may be. The Company shall pay all stamp and other taxesand duties levied in connection with the issuance of any Securities.(C) COUNTERPARTS. This Agreement may be executed in two or more identicalcounterparts, all of which shall be considered one and the same agreement andshall become effective when counterparts have been signed by each party anddelivered to the other party; provided that a facsimile signature shall beconsidered due execution and shall be binding upon the signatory thereto withthe same force and effect as if the signature were an original, not a facsimilesignature.(D) HEADINGS; SINGULAR/PLURAL. The headings of this Agreement are forconvenience of reference and shall not form part of, or affect theinterpretation of, this Agreement. Whenever required by the context of thisAgreement, the singular shall include the plural and masculine shall include thefeminine.(E) SEVERABILITY. If any provision of this Agreement shall be invalid orunenforceable in any jurisdiction, such invalidity or unenforceability shall notaffect the validity or enforceability of the remainder of this Agreement in thatjurisdiction or the validity or enforceability of any provision of thisAgreement in any other jurisdiction.(F) ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other prior oralor written agreements between the Investor, the Company, their affiliates andpersons acting on their behalf with respect to the matters discussed herein, andthis Agreement and the instruments referenced herein (including the otherTransaction Documents) contain the entire understanding of the parties withrespect to the matters covered herein and therein and, except as specificallyset forth herein or therein, neither the Company nor the Investor makes anyrepresentation, warranty, covenant or undertaking with respect to such matters.No provision of this Agreement may be amended other than by an instrument inwriting signed by the Company and the Investor, and no provision hereof may bewaived other than by an instrument in writing signed by the party against whomenforcement is sought.(G) NOTICES. Any notices or other communications required or permitted to begiven under the terms of this Agreement must be in writing and will be deemed tohave been delivered (I) upon receipt, when delivered personally; (II) uponreceipt, when sent by facsimile (provided confirmation of transmission ismechanically or electronically generated and kept on file by the sending party);or (III) one (1) day after deposit with a nationally recognized overnightdelivery service, in each case properly addressed to the party to receive thesame. The addresses and facsimile numbers for such communications shall be:If to the Company:Centurion Gold Holdings, Inc. 12Main Reef RoadPrimrose, South Africa 1416Telephone: 27(11) 873-5315With a copy to: Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP 101 East 52nd Street – 9th Floor New York, NY 10022 Attention: Arthur S. Marcus, Esq. Facsimile: (212) 813-9768If to the Investor:Dutchess Private Equities fund, LP, II312 Stuart StreetBoston, MA 02116Telephone: 617-960-3582Facsimile: 617-249-0947Each party shall provide five (5) days’ prior written notice to the other partyof any change in address or facsimile number.(H) NO ASSIGNMENT. This Agreement may not be assigned.(I) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit ofthe parties hereto and is not for the benefit of, nor may any provision hereofbe enforced by, any other person.(J) SURVIVAL. The representations and warranties of the Company and the Investorcontained in Sections 2 and 3, the agreements and covenants set forth inSections 4 and 5, and the indemnification provisions set forth in Section 10,shall survive each of the Closings and the termination of this Agreement.(K) PUBLICITY. The Company and Investor shall consult with each other in issuingany press releases or otherwise making public statements with respect to thetransactions contemplated hereby and no party shall issue any such press releaseor otherwise make any such public statement without the prior consent of theother parties, which consent shall not be unreasonably withheld or delayed,except that no prior consent shall be required if such disclosure is required bylaw, in which such case the disclosing party shall provide the other partieswith prior notice of such public statement. Notwithstanding the foregoing, theCompany shall not publicly disclose the name of Investor without the priorconsent of such Investor, except to the extent required by law. Investoracknowledges that this Agreement and all or part of the Transaction Documentsmay be deemed to be “material contracts” as that term is defined by Item601(b)(10) of Regulation S-B, and that the Company may therefore be required tofile such documents as exhibits to reports or registration statements filedunder the 1933 Act or the 1934 Act. Investor further agrees that the status ofsuch documents and materials as material contracts shall be determined solely bythe Company, in consultation with its counsel.(L) FURTHER ASSURANCES. Each party shall do and perform, or cause to be done andperformed, all such further acts and things, and shall execute and deliver allsuch other agreements, certificates, instruments and documents, as the otherparty may reasonably request in order to carry out the intent and accomplish thepurposes of this Agreement and the consummation of the transactions contemplatedhereby.(M) PLACEMENT AGENT. The Company agrees to pay the Placement Agent Thirty-FiveThousand (35,000) shares upon the execution of this Agreement. The Investorshall have no obligation with respect to any fees or with respect to any claimsmade by or on behalf of other persons or entities for fees of a typecontemplated in this Section that may be due in connection with the transactionscontemplated by the Transaction Documents. The Company shall indemnify and holdharmless the Investor, their employees, officers, directors, agents, andpartners, and their respective affiliates, from and against all claims, losses,damages, costs (including the costs of preparation and attorney’s fees) andexpenses incurred in respect of any such claimed or existing fees, as such feesand expenses are incurred.(N) NO STRICT CONSTRUCTION. The language used in this Agreement will be deemedto be the language chosen by the parties to express their mutual intent, and norules of strict construction will be applied against any party.(O) REMEDIES. The Investor and each holder of the Shares shall have all rightsand remedies set forth in this Agreement and the Registration Rights Agreementand all rights and remedies which such holders have been granted at any timeunder any other agreement or contract and all of the rights which such holdershave under any law. Any person having any rights under any provision of thisAgreement shall be entitled to enforce such rights specifically (without postinga bond or other security), to recover damages by reason of any default or breachof any provision of this Agreement, including the recovery of reasonableattorneys fees and costs, and to exercise all other rights granted by law.(P) PAYMENT SET ASIDE. To the extent that the Company makes a payment orpayments to the Investor hereunder or under the Registration Rights Agreement orthe Investor enforces or exercises its rights hereunder or thereunder, and suchpayment or payments or the proceeds of such enforcement or exercise or any partthereof are subsequently invalidated, declared to be fraudulent orpreferential, set aside, recovered from, disgorged by or are required to berefunded, repaid or otherwise restored to the Company, a trustee, receiver orany other person under any law (including, without limitation, any bankruptcylaw, state or federal law, common law or equitable cause of action), then to theextent of any such restoration the obligation or part thereof originallyintended to be satisfied shall be revived and continued in full force and effectas if such payment had not been made or such enforcement or setoff had notoccurred.(Q) PRICING OF COMMON STOCK. For purposes of this Agreement, the bid price ofthe Common Stock in this Agreement shall be as reported on Bloomberg.***SIGNATURE PAGE OF INVESTMENT AGREEMENTYour signature on this Signature Page evidences your agreement to be bound bythe terms and conditions of the Investment Agreement and the Registration RightsAgreement as of the date first written above.The undersigned signatory hereby certifies that he has read and understands theInvestment Agreement, and the representations made by the undersigned in thisInvestment Agreement are true and accurate, and agrees to be bound by its terms.DUTCHESS PRIVATE EQUITIES FUND, II, L.P.BY ITS GENERAL PARTNER,DUTCHESS CAPITAL MANAGEMENT, LLCBy:____________________________Douglas H. Leighton, Managing MemberCENTURION GOLD HOLDINGS, INC.By__________________________________Andrew Dale Paul, Chief Executive OfficerLIST OF EXHIBITSEXHIBIT A Registration Rights AgreementEXHIBIT B Opinion of Company’s CounselEXHIBIT C [reserved]EXHIBIT D Broker Representation LetterEXHIBIT E Board ResolutionEXHIBIT F Put NoticeEXHIBIT G Put Settlement SheetLIST OF SCHEDULESSchedule 4(a) SubsidiariesEXHIBIT AEXHIBIT BEXHIBIT CEXHIBIT D[BROKER’S LETTERHEAD]DateVia FacsimileAttention: ______________________________________________________Re: Centurion Gold Holdings, Inc.Dear __________________:It is our understanding that the Form______ Registration Statement bearing SECFile Number ( ___-______) filed by Centurion Gold Holdings, Inc., on Form _____on __________, 200X was declared effective on _________, 200X.This letter shall confirm that ______________ shares of the common stock ofCenturion Gold Holdings, Inc., are being sold on behalf of __________________and that we shall comply with the prospectus delivery requirements set forth inthat Registration Statement by filing the same with the purchaser.If you have any questions please do not hesitate to call.Sincerely, —————————————————–cc: .EXHIBIT EEXHIBIT FDate:RE: Put Notice Number __Dear Mr. Leighton,This is to inform you that as of today, Centurion Gold Holdings, Inc., a Floridacorporation (the “Company”), hereby elects to exercise its right pursuant to theInvestment Agreement to require Dutchess Private Equities Fund, II, LP. topurchase shares of its common stock. The Company hereby certifies that:The amount of this put is $__________.The Pricing Period runs from ________ until _______.The current number of shares issued and outstanding as of the Company are: ________________________________________Regards, ________________________________________Andrew Dale PaulCEOCenturion Gold Holdings, Inc.EXHIBIT GPUT SETTLEMENT SHEETDate:Dale,Pursuant to the Put given by Centurion Gold Holdings, Inc. to Dutchess PrivateEquities Fund, II, L.P. on _________________ 200x, we are now submitting theamount of common shares for you to issue to Dutchess.Please have a certificate bearing no restrictive legend totaling __________shares issued to Dutchess Private Equities Fund, II, LP immediately and send viaDWAC to the following account:XXXXXXIf not DWAC eligible, please send FedEx Priority Overnight to:XXXXXXOnce these shares are received by us, we will have the funds wired to theCompany.Regards,Douglas H. LeightonDATE…………….PRICEDate of Day 1…….Closing Bid of Day 1Date of Day 2…….Closing Bid of Day 2Date of Day 3…….Closing Bid of Day 3Date of Day 4…….Closing Bid of Day 4Date of Day 5…….Closing Bid of Day 5 LOWEST 1 (ONE) CLOSING BID IN PRICING PERIOD ———— PUT AMOUNT ———— AMOUNT WIRED TO COMPANY ———— PURCHASE PRICE (95% (NINETY-FIVE PERCENT)) ———— AMOUNT OF SHARES DUE ————The undersigned has completed this Put as of this ___th day of _________, 20xx.Centurion Gold Holdings, Inc.Andrew Dale Paul, CEOSCHEDULE 4(c) CAPITALIZATIONSCHEDULE 4(e) CONFLICTSSCHEDULE 4(g) MATERIAL CHANGESSCHEDULE 4(h) LITIGATIONSCHEDULE 4(l) INTELLECTUAL PROPERTYSCHEDULE 4(n) LIENSSCHEDULE 4(t) CERTAIN TRANSACTIONS