Contract

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOTBEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATESECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OFTHIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THEABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACTAND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLYSATISFACTORY TO CENTURION GOLD HOLDINGS, INC. THAT SUCH REGISTRATION IS NOTREQUIRED. SECURED CONVERTIBLE TERM NOTE FOR VALUE RECEIVED, CENTURION GOLD HOLDINGS, INC., a Florida corporation(the “BORROWER”), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o M&CCorporate Services Limited, P.O. Box 309 GT, Ugland House, South Church Street,George Town, Grand Cayman, Cayman Islands, Fax: 345-949-8080 (the “HOLDER”) orits registered assigns or successors in interest, on order, the sum of TenMillion Dollars ($10,000,000), together with any accrued and unpaid interesthereon, on February 18, 2008 (the “MATURITY DATE”) if not sooner paid. Theoriginal principal amount of this Note subject to amortizing payments pursuantto Section 1.2 hereof is hereinafter referred to as the “AMORTIZING PRINCIPALAMOUNT” and the remaining original principal amount of this Note is hereinafterreferred to as the “NON-AMORTIZING PRINCIPAL AMOUNT.” Capitalized terms used herein without definition shall have the meaningsascribed to such terms in that certain Securities Purchase Agreement dated as ofthe date hereof between the Borrower and the Holder (the “PURCHASE AGREEMENT”). The following terms shall apply to this Note: ARTICLE I INTEREST & AMORTIZATION 1.1 (a) Interest Rate. Subject to Sections 1.1(b), 4.12 and 5.6 hereof,interest payable on this Note shall accrue at a rate per annum (the “InterestRate”) equal to the “prime rate” published in The Wall Street Journal from timeto time, plus one percent (1%). The prime rate shall be increased or decreasedas the case may be for each increase or decrease in the prime rate in an amountequal to such increase or decrease in the prime rate; each change to beeffective as of the day of the change in such rate. Subject to Section 1.1(b)hereof, the Interest Rate shall not be less than six percent (6.0%). Interestshall be calculated on the basis of a 360 day year. . Interest on the AmortizingPrincipal Amount shall be payable monthly, in arrears, commencing on April 1,2005 and on the first day of each consecutive calendar month thereafter (each, a”REPAYMENT DATE”) and on the Maturity Date, whether by acceleration orotherwise. Accrued interest on the Non-Amortizing Principal Amount shall bepayable only on the Maturity Date or, in the event of the redemption orconversion of all or any portion of the Non-Amortizing Principal Amount, accruedinterest on the amount so redeemed or converted shall be paid on the date ofredemption or conversion, as the case may be. 1 of 13 1.1 (b) Interest Rate Adjustment. The Interest Rate shall be subject toadjustment on the last business day of each month hereafter until the MaturityDate (each a “Determination Date”). If on any Determination Date (i) theBorrower shall have registered under the Securities Act of 1933, as amended (the”SECURITIES ACT”), the shares of Common Stock underlying each of the conversionof this Note and the exercise of the Warrant issued on a registration statementdeclared effective by the Securities and Exchange Commission (the “SEC”), and(ii) the market price (the “Market Price”) of the Common Stock as reported byBloomberg, L.P. on the Principal Market (as defined below) for the five (5)consecutive trading days immediately preceding such Determination Date exceedsthe then applicable Fixed Conversion Price by at least twenty five percent(25%), the Interest Rate for the succeeding calendar month shall automaticallybe reduced by 100 basis points (100 b.p.) (1.0.%) for each incremental twentyfive percent (25%) increase in the Market Price of the Common Stock above thethen applicable Fixed Conversion Price. Notwithstanding the foregoing (andanything to the contrary contained in herein), in no event shall the InterestRate be less than zero percent (0%). 1.2 Minimum Monthly Principal Payments. Amortizing payments of theoutstanding principal amount of this Note not contained in the RestrictedAccount (as defined in the Restricted Account Agreement) shall begin on June 1,2005 and shall recur on each succeeding Repayment Date thereafter until theAmortizing Principal Amount has been repaid in full, whether by the payment ofcash or by the conversion of such principal into Common Stock pursuant to theterms hereof. Subject to Section 2.1 and Article 3 below, on each RepaymentDate, the Borrower shall make payments to the Holder in the amount $30,303.03(the “MONTHLY PRINCIPAL AMOUNT”), together with any accrued and unpaid interestthen due on such portion of the Amortizing Principal Amount plus any and allother amounts which are then owing under this Note that have not been paid (theMonthly Principal Amount, together with such accrued and unpaid interest andsuch other amounts, collectively, the “MONTHLY AMOUNT”); provided that,following a release of an amount of funds from the Restricted Account (asdefined in the Restricted Account Agreement) for the purposes set forth in theRestricted Account Side Letter (other than with respect to a release that occursas a result of a conversion of any Principal Amount) (each, a “RELEASE AMOUNT”)each Monthly Principal Amount due on any Repayment Date following any suchrelease shall be increased by an amount equal to (x) such Release Amount dividedby (y) the sum of (I) the number of Repayment Dates remaining until the MaturityDate plus (II) one (1). Any Principal Amount that remains outstanding on theMaturity Date shall be due and payable on the Maturity Date. 2 of 13 ARTICLE II CONVERSION REPAYMENT 2.1 (a) Payment of Monthly Amount in Cash or Common Stock. If the MonthlyAmount (or a portion thereof of such Monthly Amount if such portion of theMonthly Amount would have been converted into shares of Common Stock but forSection 3.2) is required to be paid in cash pursuant to Section 2.1(b), then theBorrower shall pay the Holder an amount equal to 102% of the Monthly Amount dueand owing to the Holder on the Repayment Date in cash. If the Monthly Amount (ora portion of such Monthly Amount if not all of the Monthly Amount may beconverted into shares of Common Stock pursuant to Section 3.2) is required to bepaid in shares of Common Stock pursuant to Section 2.1(b), the number of suchshares to be issued by the Borrower to the Holder on such Repayment Date (inrespect of such portion of the Monthly Amount converted into shares of CommonStock pursuant to Section 2.1(b)), shall be the number determined by dividing(x) the portion of the Monthly Amount converted into shares of Common Stock, by(y) the then applicable Fixed Conversion Price. For purposes hereof, the initial”FIXED CONVERSION PRICE” means $0.30. (b) Monthly Amount Conversion Guidelines. Subject to Sections2.1(a), 2.2 and 3.2 hereof, the Holder shall convert into shares of Common Stockall or a portion of the Monthly Amount due on each Repayment according to thefollowing guidelines (collectively, the “CONVERSION CRITERIA”): (i) the averageclosing price of the Common Stock as reported by Bloomberg, L.P. on thePrincipal Market for the five (5) consecutive trading days immediately precedingsuch Notice Date shall be greater than or equal to 110% of the Fixed ConversionPrice and (ii) the amount of such conversion does not exceed twenty five percent(25%) of the aggregate dollar trading volume of the Common Stock for the twentytwo (22) day trading period immediately preceding the applicable Repayment Date.If the Conversion Criteria are not met, the Holder shall convert only such partof the Monthly Amount that meets the Conversion Criteria. Any part of theMonthly Amount due on a Repayment Date that the Holder has not been able toconvert into shares of Common Stock due to failure to meet the ConversionCriteria, shall be paid by the Borrower in cash at the rate of 102% of theMonthly Amount otherwise due on such Repayment Date, within three (3) businessdays of the applicable Repayment Date. (c) Application of Conversion Amounts. Any amounts converted by theHolder pursuant to Section 2.1(b) shall be deemed to constitute payments of, orapplied against, (i) first, outstanding fees, (ii) second, accrued interest onthe Amortizing Principal Amount, (iii) third, accrued interest on theNon-Amortizing Principal Amount and (iv) fourth, the Amortizing PrincipalAmount. (d) Subject to Sections 2.1 and 2.2 hereof, if the average closingprice of the Common Stock on the Principal Market is less than one hundred tenpercent (110%) of the Fixed Conversion Price for the five (5) trading daysimmediately preceding a Repayment Date, then the Holder may elect to provide theBorrower with a Repayment Notice requiring the conversion of the Monthly Amount(together with accrued and unpaid interest and applicable fees), as of the dateof the Repayment Notice at a conversion price equal to eighty five percent (85%)of the average of the five (5) lowest closing prices of the Common Stock duringthe twenty two (22) trading days immediately prior to the date of the deliveryof such respective Repayment Notice, provided, however, that such conversion ofthe Monthly Amount due on each Repayment Date does not exceed twenty fivepercent (25%) of the aggregate dollar trading volume of the Common Stock for thetwenty two (22) trading days immediately preceding delivery of a RepaymentNotice. Any part of the Monthly Amount due on such Repayment Date that theHolder has not been able to convert into shares of Common Stock as set forth inthis Section 2.1(d) shall be paid in cash at the rate of 102% of the MonthlyAmount otherwise due on such Repayment Date, within three (3) business days ofthe applicable Repayment Date. In no event shall the conversion price for thepurposes of this Section 2.1(d) be less than $0.15. 3 of 13 (e) Subject to Sections 2.1 and 2.2 hereof, following the date uponwhich the registration statement required to be filed pursuant to theRegistration Rights Agreement is declared effective by the Securities ExchangeCommission and remains effective, the Holder may provide the Borrower with aRepayment Notice requiring the conversion of all or a portion of the NonAmortizing Principal Amount (together with accrued and unpaid interest andapplicable fees), as of the date of the Repayment Notice (i) at a conversionprice equal to eighty five percent (85%) of the average of the five (5) lowestclosing prices of the Common Stock during the twenty two (22) trading daysimmediately prior to the date of the delivery of such respective RepaymentNotice if the average closing price of the Common Stock on the Principal Marketis less than one hundred ten percent (110%) of the Fixed Conversion Price forany five (5) consecutive trading day period immediately preceding such RepaymentNotice, or (ii) at the Fixed Conversion Price, if the average closing price ofthe Common Stock on the Principal Market for the five (5) consecutive tradingdays immediately preceding such Repayment Notice shall be greater than or equalto 110% of the Fixed Conversion Price; provided, however, that any conversionsof Non-Amortizing Principal Amount shall not exceed twenty five percent (25%) ofthe aggregate dollar trading volume of the Common Stock for the twenty two (22)trading days immediately preceding delivery of a Repayment Notice. No more thantwo (2) Repayment Notices per calendar month shall be delivered by Holder toBorrower under this Section 2.1(e). In no event shall the conversion price forthe purposes of this Section 2.1(e) be less than $0.15. 2.2 No Effective Registration. Notwithstanding anything to the contraryherein, no amount payable hereunder may be converted into Common Stock unless(a) either (i) an effective current Registration Statement (as defined in theRegistration Rights Agreement) covering the shares of Common Stock to be issuedin satisfaction of such obligations exists, or (ii) an exemption fromregistration of the Common Stock is available pursuant to Rule 144 of theSecurities Act, and (b) no Event of Default hereunder exists and is continuing,unless such Event of Default is cured within any applicable cure period or isotherwise waived in writing by the Holder in whole or in part at the Holder’soption. 2.3 Optional Redemption of Amortizing Principal Amount. The Borrower willhave the option of prepaying the outstanding Amortizing Principal Amount(“OPTIONAL AMORTIZING REDEMPTION”), in whole or in part, by paying to the Holdera sum of money equal to one hundred thirty percent (130%) of the AmortizingPrincipal Amount to be redeemed, together with accrued but unpaid interestthereon and any and all other sums due, accrued or payable to the Holder arisingunder this Note, the Purchase Agreement or any Related Agreement (the”AMORTIZING REDEMPTION AMOUNT”) on the day written notice of redemption (the”NOTICE OF AMORTIZING REDEMPTION”) is given to the Holder. The Notice ofAmortizing Redemption shall specify the date for such Optional AmortizingRedemption (the “AMORTIZING REDEMPTION PAYMENT DATE”), which date shall be notless than seven (7) business days after the date of the Notice of AmortizingRedemption (the “REDEMPTION PERIOD”). A Notice of Amortizing Redemption shallnot be effective with respect to any portion of the Amortizing Principal Amountfor which the Holder has a pending election to convert pursuant to Section 3.1,or for conversions initiated or made by the Holder pursuant to Section 3.1during the Redemption Period. The Amortizing Redemption Amount shall bedetermined as if such Holder’s conversion elections had been completedimmediately prior to the date of the Notice of Amortizing Redemption. On theAmortizing Redemption Payment Date, the Amortizing Redemption Amount shall bepaid in good funds to the Holder. In the event the Borrower fails to pay theAmortizing Redemption Amount on the Amortizing Redemption Payment Date as setforth herein, then such Notice of Amortizing Redemption will be null and void. 4 of 13 2.4 Optional Redemption of Non-Amortizing Principal Amount. The Borrowerwill have the option of repaying the outstanding Non-Amortizing Principal Amount(“OPTIONAL NON-AMORTIZING REDEMPTION”), in whole or in part, by paying theHolder a sum of money equal to one hundred twenty percent (120%) of theNon-Amortizing Principal Amount to be redeemed, together with accrued but unpaidinterest thereon (the “NON-AMORTIZING REDEMPTION AMOUNT”) on the day writtennotice of redemption (the “NOTICE OF NON-AMORTIZING REDEMPTION”) is giving tothe Holder. The Notice of Non-Amortizing Redemption shall specify the date forsuch Optional Non-Amortizing Redemption (the “NON-AMORTIZING REDEMPTION DATE”),which date shall be not less than seven (7) business days after the date of theNotice of Non-Amortizing Redemption (the “NON-AMORTIZING REDEMPTION PERIOD”). ANotice of Non-Amortizing Redemption shall not be effective with respect to anyportion of the Non-Amortizing Principal Amount for which the Holder has apending election to convert pursuant to Section 3.1, or for conversionsinitiated or made by the Holder pursuant to Section 3.1 during theNon-Amortizing Redemption Period. The Non-Amortizing Redemption Amount shall bedetermined as if the Holder’s conversion elections had been completedimmediately prior to the date of the Notice of Non-Amortizing Redemption. On theNon-Amortizing Redemption Date, the Non-Amortizing Redemption Amount shall bepaid (i) in good funds to the Holder, (ii) by furnishing the Holder writtendirection to notify the bank holding the Restricted Account to release from theRestricted Account and deliver to the Holder a sum of money equal to theNon-Amortizing Redemption Amount, or (iii) if the amount on deposit in theRestricted Account is less than the Non-Amortizing Redemption Amount, byfurnishing the Holder written direction to notify the bank holding theRestricted Account to release all amounts on deposit in the Restricted Accountto the Holder and delivering to the Holder good funds in an amount equal to thebalance of the Non-Amortizing Redemption Amount. ARTICLE III CONVERSION RIGHTS 3.1. Holder’s Conversion Rights. Subject to Section 2.2, the Holder shallhave the right, but not the obligation, to convert all or any portion of thethen aggregate outstanding Principal Amount of this Note, together with interestand fees due hereon, into shares of Common Stock, subject to the terms andconditions set forth in this Article III. The Holder may exercise such right bydelivery to the Borrower of a written Notice of Conversion pursuant to Section3.3. 5 of 13 3.2 Conversion Limitation. Notwithstanding anything contained herein tothe contrary, the Holder shall not be entitled to convert pursuant to the termsof this Note an amount that would be convertible into that number of ConversionShares which would exceed the difference between 4.99% of the outstanding sharesof Common Stock and the number of shares of Common Stock beneficially owned bysuch Holder or issuable upon exercise of Warrants held by such Holder at suchtime. For the purposes of the immediately preceding sentence, beneficialownership shall be determined in accordance with Section 13(d) of the ExchangeAct and Regulation 13d-3 thereunder. The Holder may void the Conversion Sharelimitation described in this Section 3.2 upon 75 days prior notice to theBorrower or without any notice requirement upon an Event of Default. 3.3 Mechanics of Holder’s Conversion. (a) In the event that the Holderelects to convert any amounts outstanding under this Note into Common Stock, theHolder shall give notice of such election by delivering an executed andcompleted notice of conversion (a “NOTICE OF CONVERSION”) to the Borrower, whichNotice of Conversion shall provide a breakdown in reasonable detail of thePrincipal Amount, accrued interest and fees being converted. On each ConversionDate (as hereinafter defined) and in accordance with its Notice of Conversion,the Holder shall make the appropriate reduction to the Principal Amount, accruedinterest and fees as entered in its records and shall provide written noticethereof to the Borrower within two (2) business days after the Conversion Date.Each date on which a Notice of Conversion is delivered or telecopied to theBorrower in accordance with the provisions hereof shall be deemed a “CONVERSIONDATE”. A form of Notice of Conversion to be employed by the Holder is annexedhereto as Exhibit A. (b) Pursuant to the terms of a Notice of Conversion, the Borrowerwill issue instructions to the transfer agent accompanied by an opinion ofcounsel, if so required by the Borrower’s transfer agent, within one (1)business day of the date of the delivery to Borrower of the Notice of Conversionand shall cause the transfer agent to transmit the certificates representing theConversion Shares to the Holder by crediting the account of the Holder’sdesignated broker with the Depository Trust Corporation (“DTC”) through itsDeposit Withdrawal Agent Commission (“DWAC”) system within three (3) businessdays after receipt by the Borrower of the Notice of Conversion (the “DELIVERYDATE”). In the case of the exercise of the conversion rights set forth hereinthe conversion privilege shall be deemed to have been exercised and theConversion Shares issuable upon such conversion shall be deemed to have beenissued upon the date of receipt by the Borrower of the Notice of Conversion. TheHolder shall be treated for all purposes as the record holder of such shares ofCommon Stock, unless the Holder provides the Borrower written instructions tothe contrary. 3.4 Conversion Mechanics. (a) The number of shares of Common Stock to be issued upon eachconversion of this Note pursuant to this Article III shall be determined bydividing that portion of the Principal Amount and interest and fees to beconverted, if any, by the then applicable Fixed Conversion Price. In the eventof any conversions of outstanding obligations under this Note in part pursuantto this Article III, such conversions shall be deemed to constitute conversions(i) first, of the Monthly Amount for the current calendar month, (ii) then ofoutstanding Amortizing Principal Amount, by applying the conversion amount toMonthly Principal Amounts for the remaining Repayment Dates in chronologicalorder, (iii) then of the accrued interest on the Non-Amortizing PrincipalAmount, and (iv) then, of outstanding Non-Amortizing Principal Amount. 6 of 13 (b) The Fixed Conversion Price and number and kind of shares orother securities to be issued upon conversion is subject to adjustment from timeto time upon the occurrence of certain events, as follows: A. Stock Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on the Common Stock in shares of Common Stock, the Fixed Conversion Price or the Conversion Price, as the case may be, shall be proportionately reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event. B. During the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the full conversion of this Note. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. The Borrower agrees that its issuance of this Note shall constitute full authority to its officers, agents, and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the conversion of this Note. C. Share Issuances. Subject to the provisions of this Section 3.4, if the Borrower shall at any time prior to the conversion or repayment in full of the Principal Amount issue any shares of Common Stock or securities convertible into Common Stock to a person other than the Holder (except (i) pursuant to Subsections A or B above; (ii) pursuant to options, warrants or other obligations to issue shares outstanding on the date hereof as disclosed to Holder in writing; or (iii) pursuant to options that may be issued under any employee incentive stock option and/or any qualified stock option plan adopted by the Borrower); for a consideration per share (the “OFFER PRICE”) less than the Fixed Conversion Price in effect at the time of such issuance, then the Fixed Conversion Price shall be immediately reset to such lower Offer Price at the time of issuance of such securities. For purposes hereof, the issuance of any security of the Borrower convertible into or exercisable or exchangeable for Common Stock shall result in an adjustment to the Fixed Conversion Price at the time of issuance of such securities. 7 of 13 D. Reclassification, etc. If the Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes, this Note, as to the unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change. 3.5 Issuance of Replacement Note. Upon any partial conversion of thisNote, a replacement Note containing the same date and provisions of this Noteshall, at the written request of the Holder, be issued by the Borrower to theHolder for the outstanding Principal Amount of this Note and accrued interestwhich shall not have been converted or paid. Subject to the provisions ofArticle IV, the Borrower will pay no costs, fees or any other consideration tothe Holder for the production and issuance of a replacement Note. ARTICLE IV EVENTS OF DEFAULT Upon the occurrence and continuance of an Event of Default beyond anyapplicable grace period, the Holder may make all sums of principal, interest andother fees then remaining unpaid hereon and all other amounts payable hereunderimmediately due and payable. In the event of such an acceleration, the amountdue and owing to the Holder shall be one hundred thirty percent (130%) of theoutstanding principal amount of the Note (plus accrued and unpaid interest andfees, if any) (the “DEFAULT PAYMENT”). The Default Payment shall be appliedfirst to any fees due and payable to Holder pursuant to this Note, the PurchaseAgreement or the Related Agreements, then to accrued and unpaid interest due onthe Note and then to outstanding principal balance of the Note. The occurrence of any of the following events set forth in Sections 4.1through 4.10, inclusive, is an “EVENT OF DEFAULT”: 4.1 Failure to Pay Principal, Interest or other Fees. The Borrower failsto pay when due any installment of principal, interest or other fees hereon inaccordance herewith, or the Borrower fails to pay when due any amount due underany other promissory note issued by Borrower, and in any such case, such failureshall continue for a period of three (3) days following the date upon which anysuch payment was due. 4.2 Breach of Covenant. The Borrower breaches any covenant or any otherterm or condition of this Note or the Purchase Agreement in any materialrespect, or the Borrower or any of its Subsidiaries breaches any covenant or anyother term or condition of any Related Agreement in any material respect and,any such case, such breach, if subject to cure, continues for a period offifteen (15) days after the occurrence thereof. 4.3 Breach of Representations and Warranties. Any representation orwarranty made by the Borrower in this Note or the Purchase Agreement, or by theBorrower or any of its Subsidiaries in any Related Agreement, shall, in any suchcase, be false or misleading in any material respect on the date that suchrepresentation or warranty was made or deemed made. 8 of 13 4.4 Receiver or Trustee. The Borrower or any of its Subsidiaries shallmake an assignment for the benefit of creditors, or apply for or consent to theappointment of a receiver or trustee for it or for a substantial part of itsproperty or business; or such a receiver or trustee shall otherwise beappointed. 4.5 Judgments. Any money judgment, writ or similar final process shall beentered or filed against the Borrower or any of its Subsidiaries or any of theirrespective property or other assets for more than $150,000 and shall remainunvacated, unbonded or unstayed for a period of thirty (30) days. 4.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidationproceedings or other proceedings or relief under any bankruptcy law or any lawfor the relief of debtors shall be instituted by or against the Borrower or anyof its Subsidiaries. 4.7 Stop Trade. An SEC stop trade order or Principal Market tradingsuspension of the Common Stock shall be in effect for five (5) consecutive daysor five (5) days during a period of ten (10) consecutive days, excluding in allcases a suspension of all trading on a Principal Market, provided that theBorrower shall not have been able to cure such trading suspension within thirty(30) days of the notice thereof or list the Common Stock on another PrincipalMarket within sixty (60) days of such notice. The “Principal Market” for theCommon Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap Market,NASDAQ National Market System, American Stock Exchange, or New York StockExchange (whichever of the foregoing is at the time the principal tradingexchange or market for the Common Stock, or any securities exchange or othersecurities market on which the Common Stock is then being listed or traded). 4.8 Failure to Deliver Common Stock or Replacement Note. The Borrowershall fail (i) to timely deliver Common Stock to the Holder pursuant to and inthe form required by this Note, and Section 9 of the Purchase Agreement, if suchfailure to timely deliver Common Stock shall not be cured within two (2)business days or (ii) to deliver a replacement Note to Holder within seven (7)business days following the required date of such issuance pursuant to thisNote, the Purchase Agreement or any Related Agreement (to the extent requiredunder such agreements).4.9 Default Under Related Agreements or Other Agreements. The occurrence andcontinuance of any Event of Default (as defined in the Purchase Agreement or anyRelated Agreement) or any event of default (or similar term) under any otherindebtedness.4.10 Change in Control. The occurrence of a change in the controlling ownershipof the Borrower. DEFAULT RELATED PROVISIONS 4.11 Default Interest Rate. Following the occurrence and during thecontinuance of an Event of Default, the Borrower shall pay additional intereston this Note in an amount equal to two percent (2%) per month, and alloutstanding obligations under this Note, including unpaid interest, shallcontinue to accrue such additional interest from the date of such Event ofDefault until the date such Event of Default is cured or waived. 9 of 13 4.12 Conversion Privileges. The conversion privileges set forth in ArticleIII shall remain in full force and effect immediately from the date hereof anduntil this Note is paid in full. 4.13 Cumulative Remedies. The remedies under this Note shall becumulative. ARTICLE V MISCELLANEOUS 5.1 Failure or Indulgence Not Waiver. No failure or delay on the part ofthe Holder hereof in the exercise of any power, right or privilege hereundershall operate as a waiver thereof, nor shall any single or partial exercise ofany such power, right or privilege preclude other or further exercise thereof orof any other right, power or privilege. All rights and remedies existinghereunder are cumulative to, and not exclusive of, any rights or remediesotherwise available. 5.2 Notices. Any notice herein required or permitted to be given shall bein writing and shall be deemed effectively given: (a) upon personal delivery tothe party notified, (b) when sent by confirmed telex or facsimile if sent duringnormal business hours of the recipient, if not, then on the next business day,(c) five days after having been sent by registered or certified mail, returnreceipt requested, postage prepaid, or (d) one day after deposit with anationally recognized overnight courier, specifying next day delivery, withwritten verification of receipt. All communications shall be sent to theBorrower at the address provided in the Purchase Agreement executed inconnection herewith, and to the Holder at the address provided in the PurchaseAgreement for such Holder, with a copy to John E. Tucker, Esq., 825 ThirdAvenue, 14th Floor, New York, New York 10022, facsimile number (212) 541-4434,or at such other address as the Borrower or the Holder may designate by ten daysadvance written notice to the other parties hereto. A Notice of Conversion shallbe deemed given when made to the Borrower pursuant to the Purchase Agreement. 5.3 Amendment Provision. The term “Note” and all reference thereto, asused throughout this instrument, shall mean this instrument as originallyexecuted, or if later amended or supplemented, then as so amended orsupplemented, and any successor instrument issued pursuant to Section 3.5hereof, as it may be amended or supplemented. 5.4 Assignability. This Note shall be binding upon the Borrower and itssuccessors and assigns, and shall inure to the benefit of the Holder and itssuccessors and assigns, and may be assigned by the Holder in accordance with therequirements of the Purchase Agreement. This Note shall not be assigned by theBorrower without the consent of the Holder. 5.5 Governing Law. This Note shall be governed by and construed inaccordance with the laws of the State of New York, without regard to principlesof conflicts of laws. Any action brought by either party against the otherconcerning the transactions contemplated by this Agreement shall be brought onlyin the state courts of New York or in the federal courts located in the state ofNew York. Both parties and the individual signing this Note on behalf of theBorrower agree to submit to the jurisdiction of such courts. The prevailingparty shall be entitled to recover from the other party its reasonableattorney’s fees and costs. In the event that any provision of this Note isinvalid or unenforceable under any applicable statute or rule of law, then suchprovision shall be deemed inoperative to the extent that it may conflicttherewith and shall be deemed modified to conform with such statute or rule oflaw. Any such provision which may prove invalid or unenforceable under any lawshall not affect the validity or unenforceability of any other provision of thisNote. Nothing contained herein shall be deemed or operate to preclude the Holderfrom bringing suit or taking other legal action against the Borrower in anyother jurisdiction to collect on the Borrower’s obligations to Holder, torealize on any collateral or any other security for such obligations, or toenforce a judgment or other court in favor of the Holder. 10 of 13 5.6 Maximum Payments. Nothing contained herein shall be deemed toestablish or require the payment of a rate of interest or other charges inexcess of the maximum permitted by applicable law. In the event that the rate ofinterest required to be paid or other charges hereunder exceed the maximumpermitted by such law, any payments in excess of such maximum shall be creditedagainst amounts owed by the Borrower to the Holder and thus refunded to theBorrower. 5.7 Security Interest and Guarantee. The Holder has been granted asecurity interest (i) in certain assets of the Borrower and its Subsidiaries asmore fully described in the Master Security Agreement dated as of the datehereof and (ii) pursuant to the Stock Pledge Agreement dated as of the datehereof. The obligations of the Borrower under this Note are guaranteed bycertain Subsidiaries of the Borrower pursuant to the Subsidiary Guaranty datedas of the date hereof.5.8 Construction. Each party acknowledges that its legal counsel participated inthe preparation of this Note and, therefore, stipulates that the rule ofconstruction that ambiguities are to be resolved against the drafting partyshall not be applied in the interpretation of this Note to favor any partyagainst the other.5.9 Cost of Collection. If default is made in the payment of this Note, theBorrower shall pay to Holder reasonable costs of collection, includingreasonable attorney’s fees. [Balance of page intentionally left blank; signature page follows.] 11 of 13 IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in itsname effective as of this 18th day of February , 2005. CENTURION GOLD HOLDINGS, INC. By:________________________________ Name: Title:WITNESS:_______________________________ 12 of 13 EXHIBIT A NOTICE OF CONVERSION(To be executed by the Holder in order to convert all or part of the Noteinto Common Stock[Name and Address of Holder]The Undersigned hereby converts $_________ of the principal due on [specifyapplicable Repayment Date] under the Convertible Term Note issued by CenturionGold Holdings, Inc. dated February __, 2005 by delivery of Shares of CommonStock of Centurion Gold Holdings, Inc. on and subject to the conditions setforth in Article III of such Note.1. Date of Conversion _______________________2. Shares To Be Delivered: _______________________ By:_______________________________ Name:_____________________________ Title:______________________________ 13 of 13