SUBORDINATION AGREEMENT
This Subordination Agreement (this "Agreement") is entered into as of
the 23rd day of September, 2004, by and between THE HOLLANDSCHE TRUST No. IT
8953/98 (the "Trust"; the Trust, together with any successors and assigns of the
Trust, are collectively referred to herein as the "Subordinated Lenders"), and
Laurus Master Fund, Ltd. (the "Senior Lender"), and acknowledged and agreed to
by the Company (as defined below). Unless otherwise defined herein, capitalized
terms used herein shall have the meaning provided such terms in the Securities
Purchase Agreement referred to below.
BACKGROUND
WHEREAS, the Senior Lender has made a loan to Centurion Gold Holdings,
Inc., a Florida corporation, (the "Company") pursuant to, and in accordance
with, (i) that certain Securities Purchase Agreement dated as of the date hereof
by and between the Company and Laurus (as amended, modified or supplemented from
time to time, the "Securities Purchase Agreement") and (ii) the Related
Agreements referred to in the Securities Purchase Agreement.
WHEREAS, the Subordinated Lender are has made loans to the Company
and/or Subsidiaries of the Company.
NOW, THEREFORE, each Subordinated Lender and the Senior Lender agree as
follows:
TERMS
1. All obligations of each the Company and/or any of its
Subsidiaries to the Senior Lender, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent or now or hereafter existing,
or due or to become due are referred to as "Senior Liabilities". Any and all
loans made by the Subordinated Lenders to the Company and/or any of its
Subsidiaries, together with all other obligations of the Company and/or any of
its Subsidiaries to any Subordinated Lender (in each case, including any
interest, fees or penalties related thereto), howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent or now or
hereafter existing, or due or to become due are referred to as "Junior
Liabilities". It is expressly understood and agreed that the term "Senior
Liabilities", as used in this Agreement, shall include, without limitation, any
and all interest, fees and penalties accruing on any of the Senior Liabilities
after the commencement of any proceedings referred to in paragraph 4 of this
Agreement, notwithstanding any provision or rule of law which might restrict the
rights of the Senior Lender, as against the Company, its Subsidiaries or anyone
else, to collect such interest, fees or penalties, as the case may be.
2. Except as expressly otherwise provided in this Agreement or as
the Senior Lender may otherwise expressly consent in writing, the payment of the
Junior Liabilities shall be postponed and subordinated to the payment in full of
all Senior Liabilities. Furthermore, no payments or other distributions
whatsoever in respect of any Junior Liabilities shall be made, nor shall any
property or assets of the Company or any of its Subsidiaries be applied to the
purchase or other acquisition or retirement of any Junior Liability.
3. Each Subordinated Lender hereby subordinates all security
interests that have been, or may be, granted by the Company and/or any of its
Subsidiaries to such Subordinated Lender in respect of the Junior Liabilities,
to the security interests granted by the Company and/or any of its Subsidiaries
to the Senior Lender in respect of the Senior Liabilities.
4. In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar proceedings relating to the
Company and/or any of its Subsidiaries or to its creditors, as such, or to its
property (whether voluntary or involuntary, partial or complete, and whether in
bankruptcy, insolvency or receivership, or upon an assignment for the benefit of
creditors, or any other marshalling of the assets and liabilities of the Company
and/or any of its Subsidiaries, or any sale of all or substantially all of the
assets of the Company and/or any of its Subsidiaries, or otherwise), the Senior
Liabilities shall first be paid in full before any Subordinated Lender shall be
entitled to receive and to retain any payment or distribution in respect of any
Junior Liability.
5. Each Subordinated Lender will xxxx his books and records so as
to clearly indicate that their respective Junior Liabilities are subordinated in
accordance with the terms of this Agreement. Each Subordinated Lender will
execute such further documents or instruments and take such further action as
the Senior Lender may reasonably request from time to time request to carry out
the intent of this Agreement.
6. Each Subordinated Lender hereby waives all diligence in
collection or protection of or realization upon the Senior Liabilities or any
security for the Senior Liabilities.
7. No Subordinated Lender will without the prior written consent
of the Senior Lender: (a) attempt to enforce or collect any Junior Liability or
any rights in respect of any Junior Liability; or (b) commence, or join with any
other creditor in commencing, any bankruptcy, reorganization or insolvency
proceedings with respect to the Company and/or any of its Subsidiaries.
8. The Senior Lender may, from time to time, at its sole
discretion and without notice to any Subordinated Lender, take any or all of the
following actions: (a) retain or obtain a security interest in any property to
secure any of the Senior Liabilities; (b) retain or obtain the primary or
secondary obligation of any other obligor or obligors with respect to any of the
Senior Liabilities; (c) extend or renew for one or more periods (whether or not
longer than the original period), alter or exchange any of the Senior
Liabilities, or release or compromise any obligation of any nature of any
obligor with respect to any of the Senior Liabilities; and (d) release their
security interest in, or surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the Senior
Liabilities, or extend or renew for one or more periods (whether or not longer
than the original period) or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such property.
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9. The Senior Lender may, from time to time, whether before or
after any discontinuance of this Agreement, without notice to any Subordinated
Lender, assign or transfer any or all of the Senior Liabilities or any interest
in the Senior Liabilities; and, notwithstanding any such assignment or transfer
or any subsequent assignment or transfer of the Senior Liabilities, such Senior
Liabilities shall be and remain Senior Liabilities for the purposes of this
Agreement, and every immediate and successive assignee or transferee of any of
the Senior Liabilities or of any interest in the Senior Liabilities shall, to
the extent of the interest of such assignee or transferee in the Senior
Liabilities, be entitled to the benefits of this Agreement to the same extent as
if such assignee or transferee were the Senior Lender, as applicable; provided,
however, that, unless the Senior Lender shall otherwise consent in writing, the
Senior Lender shall have an unimpaired right, prior and superior to that of any
such assignee or transferee, to enforce this Agreement, for the benefit of the
Senior Lender, as to those of the Senior Liabilities which the Senior Lender has
not assigned or transferred.
10. The Senior Lender shall not be prejudiced in its rights under
this Agreement by any act or failure to act of any Subordinated Lender, or any
noncompliance of any Subordinated Lender with any agreement or obligation,
regardless of any knowledge thereof which the Senior Lender may have or with
which the Senior Lender may be charged; and no action of the Senior Lender
permitted under this Agreement shall in any way affect or impair the rights of
the Senior Lender and the obligations of any Subordinated Lender under this
Agreement.
11. No delay on the part of the Senior Lender in the exercise of
any right or remedy shall operate as a waiver of such right or remedy, and no
single or partial exercise by the Senior Lender of any right or remedy shall
preclude other or further exercise of such right or remedy or the exercise of
any other right or remedy; nor shall any modification or waiver of any of the
provisions of this Agreement be binding upon the Senior Lender except as
expressly set forth in a writing duly signed and delivered on behalf of the
Senior Lender. For the purposes of this Agreement, Senior Liabilities shall have
the meaning set forth in Section 1 above, notwithstanding any right or power of
any Subordinated Lender or anyone else to assert any claim or defense as to the
invalidity or unenforceability of any such obligation, and no such claim or
defense shall affect or impair the agreements and obligations of any
Subordinated Lender under this Agreement.
12. This Agreement shall be binding upon each Subordinated Lender
and upon the heirs, legal representatives, successors and assigns of each
Subordinated Lender and the successors and assigns of any Subordinated Lender.
13. This Agreement shall be construed in accordance with and
governed by the laws of New York without regard to conflict of laws provisions.
Wherever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
[signature page follows]
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IN WITNESS WHEREOF, this Agreement has been made and delivered this
23rd day of September, 2004.
THE HOLLANDSCHE TRUST NO. IT 8953/98
By:_________________________________
Name:
Title:
LAURUS MASTER FUND, LTD.
By:_________________________________
Name:
Title:
Acknowledged and Agreed to by:
CENTURION GOLD HOLDINGS, INC.
By:___________________________
Name:
Title:
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