INDEMNIFICATION AGREEMENT

 

Exhibit 10.3

 

                            INDEMNIFICATION AGREEMENT

 

 

THIS   INDEMNIFICATION   AGREEMENT   (this   "Agreement) is dated as of December 19,

2005, by and between 21st 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 MICHAEL H. BRAUN,

whose   residence   is 19331 NW 3RD Street,   Pembroke   Pines,   Florida   33029 (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:

 

 

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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:

 

 

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      (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.

 

 

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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