INDEMNIFICATION AGREEMENT
THIS
INDEMNIFICATION AGREEMENT (this “Agreement) is dated as
of June 25, 2007, by and between 21
st CENTURY
HOLDING COMPANY, a Florida corporation (the “Company”),
with its principal office located at 3661 West Oakland Park
Boulevard, Suite 300, Lauderdale Lakes, Florida 33311, and ANTHONY
C. KRAYER, III, whose residence is 6051 North Ocean Drive #1405,
Hollywood, Florida 33019 (the
“Indemnitee”).
Recitals
1.
The
substantial increase in corporate litigation subjects
directors and officers of corporations and others to expensive
litigation risks at the same time that the availability of
competent and qualified directors, officers, employees,
consultants, advisers and agents has been greatly reduced, and
the coverage offered by directors’ and officers’
liability insurance has been severely limited;
2.
The
Company’s Restated and Amended Articles of Incorporation
(the “Articles of Incorporation”) and By-Laws (the
By-Laws”) requires the Company to indemnify and advance
expenses to its directors and officers to the fullest extent
permitted by law and the Indemnitee has been serving and
continues to serve as a director or officer of the Company in
part in reliance on such Articles of
Incorporation;
3.
In
recognition of Indemnitee’s need for substantial
protection against personal liability in order to enhance
Indemnitee’s continued service to the Company in an
effective manner and Indemnitee’s reliance on the
Articles of Incorporation and By-Laws, and in part to provide
Indemnitee with specific contractual assurance that the
protection promised by the Articles of Incorporation and
By-Laws will be available to Indemnitee (regardless of, among
other things, any amendment to or revocation of such or any
change in the composition of the Company’s Board of
Directors (the “Board”) or acquisition transaction
relating to the Company), the Company wishes to provide in
this Agreement for the indemnification of, and the advancing
of expenses to, Indemnitee to the fullest extent (whether
partial or complete) permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company’s
directors’ and officers’ liability insurance
policies;
4.
As
a condition to the Indemnitee’s agreement to continue to
serve as a director of the Company, the Indemnitee requires
that he be indemnified from liability to the fullest extent
permitted by law; and
5.
The
Company is willing to indemnify the Indemnitee to the fullest
extent permitted by law in order to retain the services of the
Indemnitee.
NOW, THEREFORE ,
in consideration of the premises and mutual covenants set forth
herein, the parties hereby agree as follows:
1.
MANDATORY
INDEMNIFICATION IN PROCEEDINGS OTHER THAN THOSE BY OR IN THE
RIGHT OF THE COMPANY. Subject to Section 5 hereof, the Company
shall indemnify and hold harmless the Indemnitee from and
against any and all claims, damages, expenses (including
attorneys’ fees), judgments, penalties, fines (including
excise taxes assessed with respect to an employee benefit
plan), settlements, and all other liabilities incurred or paid
by him in connection with the investigation, defense,
prosecution, settlement or appeal of any threatened, pending
or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than action
by or in the right of the Company) and to which the Indemnitee
was or is a party or is threatened to be made a party by
reason of the fact that the Indemnitee is or was an officer,
director, shareholder, employee, consultant, adviser or agent
of the Company, or is or was serving at the request of the
Company as an officer, director, partner, trustee, employee,
adviser or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, or
by reason of anything done or not done by the Indemnitee in
any such capacity or capacities, provided that the Indemnitee
acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was
unlawful.
2.
MANDATORY
INDEMNIFICATION IN PROCEEDINGS BY OR IN THE RIGHT OF THE
COMPANY. Subject to Section 5 hereof the Company shall
indemnify and hold harmless the Indemnitee from and against
any and all expenses (including attorneys’ fees) and
amounts actually and reasonably incurred or paid by him in
connection with the investigation, defense, prosecution,
settlement or appeal of any threatened, pending or completed
action, suit or proceeding by or in the right of the Company
to procure a judgment in its favor, whether civil, criminal,
administrative or investigative, and to which the Indemnitee
was or is a party or is threatened to be made a party by
reason of the fact that the Indemnitee is or was an officer,
director, shareholder, employee, consultant, adviser or agent
of the Company, or is or was serving at the request of the
Company as an officer, director, partner, trustee, employee,
adviser or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, or
by reason of anything done or not done by the Indemnitee in
any such capacity or capacities, provided that (i) the
Indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company and (ii) no indemnification shall be made under this
Section 2 in respect of any claim, issue or matter as to which
the Indemnitee shall have been adjudged to be liable to the
Company for misconduct in the performance of his duty to the
Company unless, and only to the extent that, the court in
which such proceeding was brought (or any other court of
competent jurisdiction) shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses which such
court shall deem proper.
3.
MANDATORY
INDEMNIFICATION AGAINST EXPENSES INCURRED WHILE TESTIFYING.
Subject to Section 5 hereof, the Company shall indemnify the
Indemnitee against expenses (including attorneys’ fees)
incurred or paid by the Indemnitee as a result of providing
testimony in any proceeding, whether civil, criminal,
administrative or investigative (including but not limited to
any action or suit by or in the right of the Company to
procure judgment in its favor), by reason of the fact that the
Indemnitee is or was an officer, director, shareholder,
employee, consultant, adviser or agent of the Company, or is
or was serving at the request of the Company as an officer,
director, partner, trustee, employee, adviser or agent of
another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
4.
REIMBURSEMENT
OF EXPENSES FOLLOWING ADJUDICATION OF NEGLIGENCE. The Company
shall reimburse the Indemnitee for any expenses (including
attorneys’ fees) and amounts actually and reasonably
incurred or paid by him in connection with the investigation,
defense, settlement or appeal of any action or suit described
in Section 2 hereof that results in an adjudication that the
Indemnitee was liable for negligence, gross negligence or
recklessness (but not willful misconduct) in the performance
of his duty to the Company; provided, however, that the
Indemnitee acted in good faith and in a manner he believed to
be in or not opposed to the best interests of the
Company.
5.
AUTHORIZATION
OF INDEMNIFICATION. Any indemnification under Sections 1, 2
and 3 hereof (unless ordered by a court) and any reimbursement
made under Section 4 hereof shall be made by the Company only
as authorized in the specific case upon a determination (the
“Determination”) that indemnification or
reimbursement of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable requirements set
forth in Sections 1, 2, 3 and 4 hereof, as the case may be.
Subject to Sections 6.6, 6.7 and 9 of this Agreement, the
Determination shall be made in the following order of
preference:
(a)
first,
by the Board by a majority vote or consent of a quorum, in
each case consisting of directors who are not, at the time of
the Determination, named parties to such action, suit or
proceeding (“Disinterested Directors”);
or
(b)
next,
if such a quorum of Disinterested Directors cannot be
obtained, by majority vote or consent of a committee duly
designated by the Board (in which designation all directors,
whether or not Disinterested Directors, may participate)
consisting solely of two or more Disinterested Directors;
or
(c)
next,
if such a committee cannot be designated, by any independent
legal counsel (who may be any outside counsel regularly
employed by the Company) in a written opinion; or
(d)
next,
if such legal counsel determination cannot be obtained, by
vote or consent of the holders of a majority of the
Company’s Common Stock.
5.1
NO
PRESUMPTIONS. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon
a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the Indemnitee did not act
in good faith and in a manner that he reasonably believed to
be in or not opposed to the best interests of the Company, and
with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was
unlawful.
5.2
BENEFIT
PLAN CONDUCT. The Indemnitee’s conduct with respect to
an employee benefit plan for a purpose he reasonably believed
to be in the interests of the participants in and
beneficiaries of the plan shall be deemed to be conduct that
the Indemnitee reasonably believed to be not opposed to the
best interests of the Company.
5.3
RELIANCE
AS SAFE HARBOR. For purposes of any Determination hereunder,
the Indemnitee shall be deemed to have acted in good faith and
in a manner he reasonably believed to be in or not opposed to
the best interests of the Company, or, with respect to any
criminal action or proceeding, to have had no reasonable cause
to believe his conduct was unlawful, if his action is based on
(i) the records or books of account of the Company or another
enterprise, including financial statements, (ii) information
supplied to him by the officers of the Company or another
enterprise in the course of their duties, (iii) the advice of
legal counsel for the Company or another enterprise, or (iv)
information or records given or reports made to the Company or
another enterprise by an independent certified public
accountant or by an appraiser or other expert selected with
reasonable care by the Company or another enterprise. The term
“another enterprise” as used in
this Section
5.3 shall mean any other corporation or partnership, joint venture,
trust, employee benefit plan or other enterprise of which the
Indemnitee is or was serving at the request of the Company as an
officer, director, partner, trustee, employee, adviser or agent.
The provisions of
this Section
5.3 shall not be deemed to be exclusive or to limit in any way the
other circumstances in which the Indemnitee may be deemed to have
met the applicable standard of conduct set forth in Sections 1,2,
or 4 hereof, as the case may be.
5.4
SUCCESS
ON MERITS OR OTHERWISE. Notwithstanding any other provision of
this Agreement, to the extent that the Indemnitee has been
successful on the merits or otherwise in defense of any
action, suit or proceeding described in Sections 1 or 2
hereof, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including
attorneys’ fees) actually and reasonably incurred by him
in connection with the investigation, defense, settlement or
appeal thereof. For purposes of
this Section
5.4, the term “successful on the merits or otherwise”
shall include, but not be limited to, (i) any termination,
withdrawal, or dismissal (with or without prejudice) of any claim,
action, suit or proceeding against the Indemnitee without any
express finding of liability or guilt against him, and (ii) the
expiration of 120 days after the making of any claim or threat of
an action, suit or proceeding without the institution of the same
and without any promise or payment made to induce a
settlement.
5.5
PARTIAL
INDEMNIFICATION OR REIMBURSEMENT. If the Indemnitee is
entitled under any provision of this Agreement of
indemnification and/or reimbursement by the Company for some
or a portion of the claims, damages, expenses (including
attorneys’ fees), judgments, penalties, fines or amounts
paid in settlement by the Indemnitee in connection with the
investigation of, defense of, settlement of, appeal of or
testimony provided with respect to any action specified in
Sections 1, 2, 3 or 4 hereof, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify
and/or reimburse the Indemnitee for the portion thereof to
which the Indemnitee is entitled. The party or parties making
the Determination shall determine the portion (if less than
all) of such claims, damages, expenses (including
attorneys’ fees), judgments, penalties, fines or amounts
paid in settlement for which the Indemnitee is entitled to
indemnification and/or reimbursement under this
Agreement.
6.
PROCEDURES
FOR DETERMINATION OF WHETHER STANDARDS HAVE BEEN
SATISFIED.
6.1
COSTS.
All costs of making the Determination required by Section 6
hereof shall be borne solely by the Company, including, but
not limited to, the costs of legal counsel, proxy
solicitations and judicial determinations. The Company shall
also be solely responsible for paying (i) all reasonable
expenses incurred by the Indemnitee to enforce this Agreement,
including, but not limited to, the costs incurred by the
Indemnitee to obtain court-ordered indemnification pursuant to
Section 9 hereof regardless of the outcome of any such
application or proceeding, and (ii) all costs of defending any
suits or proceedings challenging payments to the
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