S-3

As filed with the Securities and Exchange Commission on September 30, 2003

File No. 333-_________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM S-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

________________

21^st CENTURY HOLDING COMPANY

(Exact name of registrant as specified in its charter)

Florida	65-0248866
(State or other jurisdiction of  incorporation or organization)	(I.R.S. Employer Identification No.)

4161 N.W. 5^th Street, Plantation, FL 33317, (954) 581-9993

(Address, including zip code, and telephone number, including area code,

of registrant’s principal executive offices)

________________

Richard A. Widdicombe

Chief Executive Officer

21^st Century Holding Company

4161 N.W. 5^th Street

Plantation, FL 33317

(954) 581-9993

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

Copies to:

A. Jeffry Robinson, P.A.

Broad and Cassel

201 South Biscayne Boulevard

Miami Center, Suite 3000

Miami, Florida 33131

Telephone: (305) 373-9400

Telecopier: (305) 373-9443

________________

Approximate date of commencement of proposed sale to the public:

As soon as practicable after this Registration Statement becomes effective.

If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.  [  ]

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X]

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [  ]

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to Be Registered	Amount to be Registered (1)	Proposed Maximum Offering Price per Unit (2)	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
Redeemable Warrants to purchase Common Stock, $.01 par value (3)	1,040,000 warrants	$  12.50	$13,000,000	$1,051.70
Common Stock, $.01 par value	520,000 shares	$      -0-	$             -0-	$         -0-
Total registration fee				$1,051.70

(1)

Also includes, pursuant to Rule 416 under the Securities Act of 1933, an indeterminant number of shares and warrants that may be issued, offered or sold to prevent dilution resulting from stock splits, stock dividends, or similar transactions.

(2)

Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 under the Securities Act.

(3)

Each Redeemable Warrant is exercisable for one-half share of Common Stock and has a minimum exercise price of $15.00 per share and a maximum exercise price of $25.00 per share.  The registration fee paid in connection herewith is based on the maximum exercise price per share.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

PROSPECTUS

SUBJECT TO COMPLETION, SEPTEMBER 30, 2003

1,040,000 REDEEMABLE WARRANTS

520,000 SHARES OF COMMON STOCK

UNDERLYING REDEEMABLE WARRANTS

21^st CENTURY HOLDING COMPANY

This prospectus covers:

•

1,040,000 redeemable warrants held by the purchasers of our 6% senior subordinated notes due July 31, 2006 and the placement agent for our private offering in which the notes were sold, all of whom are identified later in this prospectus. Each warrant is exercisable for one-half of one share of common stock. These warrants are transferable and expire on July 31, 2006.

•

520,000 shares of our common stock that will be issued upon exercise of these warrants.

We will not receive any proceeds from the sale of the common stock or the sale of the warrants prior to exercise. We will receive proceeds only from the exercise of the warrants. The exercise price of the warrants will be based on the weighted-average volume price for our common stock on Nasdaq for the 60 consecutive trading days following July 31, 2003, with a minimum exercise price per share of $15.00 and a maximum exercise price per share of $25.00. We will pay our out-of-pocket expenses, legal and accounting fees, and the other expenses of registering these shares and warrants for resale.

The shareholders and warrant holders named in this prospectus may offer and sell these shares and warrants at any time using a variety of different methods. The actual number of shares sold and the prices at which the shares or warrants are sold will depend upon the market prices at the time of those sales; therefore, we have not included in this prospectus information about the price to the public of the shares or warrants or the proceeds to the selling security holders.

Our common stock is traded on the Nasdaq National Market under the symbol “TCHC.” On September 29, 2003, the last reported sale price of the common stock on the Nasdaq National Market was $17.02 per share. Our warrants are not currently listed for trading.

You should carefully consider the “Risks of Investing in Our Shares” section beginning on page 3 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is September ____, 2003.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

TABLE OF CONTENTS

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PROSPECTUS SUMMARY	1
RISKS OF INVESTING IN OUR SHARES	3
Our revenues and operating performance may fluctuate with business cycles in the property and casualty insurance industry.	3
If we are unable to continue our growth by expanding the insurance products we offer and expanding the markets in which we operate, our future financial results may suffer.	3
Although we follow the industry practice of reinsuring a portion of our risks, we may not be able to successfully alleviate risk through reinsurance arrangements.	4
Our investment portfolio may suffer reduced returns or losses, which would significantly reduce our earnings.	5
Our loss reserves may be inadequate to cover our actual liability for losses, and as a result our results of operations could be adversely affected.	5
We are subject to significant government regulation, which can limit our growth and increase our expenses, thereby reducing our earnings.	6
We rely on agents, most of whom are independent agents or franchisees, to write our insurance policies, and if we are not able to attract and retain independent agents and franchisees, our revenues would be negatively affected.	6
Our primary insurance product, nonstandard automobile insurance, historically has a higher frequency of claims than standard automobile insurance, thereby increasing our potential for loss exposure beyond what we would be likely to experience if we offered only standard automobile insurance.	6
Florida’s personal injury protection insurance statute contains provisions that favor claimants, causing us to experience a higher frequency of claims than might otherwise be the case if we operated only outside of Florida.	7
Our business strategy is to avoid competition in our automobile insurance products based on price to the extent possible. This strategy, however, may result in the loss of business in the short term.	7
With operations concentrated in Florida, we could be adversely affected by unpredictable catastrophic events such as hurricanes and tropical storms.	7
Our president and chief executive officer, and our president and chief executive officer of our principal subsidiaries, are key to the strategic direction of our company. If we were to lose the services of either of them, our business could be harmed.	8
The trading of warrants may negatively affect the trading prices of our common stock.	8
Our largest shareholders control approximately 32% of the voting power of our outstanding common stock, which could discourage potential acquirors and prevent changes in management.	8
We have authorized but unissued preferred stock, which could affect rights of holders of common stock.	8
Our articles of incorporation and bylaws and Florida law may discourage takeover attempts and changes in management.	9
As a holding company, we depend on the earnings of our subsidiaries and their ability to pay dividends to the holding company as the primary source of our income.	9

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TABLE OF CONTENTS

(continued)

NOTE REGARDING FORWARD LOOKING STATEMENTS	10
USE OF PROCEEDS	10
SELLING SECURITY HOLDERS	11
OUR SECURITIES	12
HOW THE SHARES AND WARRANTS MAY BE DISTRIBUTED	15
LEGAL MATTERS	16
EXPERTS	16
WHERE YOU CAN FIND MORE INFORMATION	16
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE	17
INDEMNIFICATION OF DIRECTORS AND OFFICERS	18
&n bsp;

ABOUT THIS PROSPECTUS

You should rely only on the information contained in this prospectus. No dealer, salesperson or other person is authorized to give any information that is not contained in this prospectus. This prospectus is not an offer to sell nor is it seeking an offer to buy these shares or warrants in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of the delivery of this prospectus or any sale of these shares or warrants.

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PROSPECTUS SUMMARY

This is only a summary and does not contain all of the information that may be important to you. You should read the more detailed information contained in this prospectus and all other information, including the financial information and statements with notes, as discussed in the “Where You Can Find More Information” section of this prospectus.

Overview

We are a vertically integrated insurance holding company, which, through our subsidiaries, controls substantially all aspects of the insurance underwriting, distribution and claims process. We underwrite personal automobile insurance, general liability insurance, flood insurance, homeowners insurance and mobile home property and casualty insurance in the State of Florida through our wholly owned subsidiaries, Federated National Insurance Company and American Vehicle Insurance Company. American Vehicle was approved in August 2003 to be a foreign insurer in the State of Georgia. During the year ended December 31, 2002, 83.42%, 13.75% and 2.83% of the policies we underwrote were for personal automobile insurance, homeowners insurance and mobile home property and casualty insurance, respectively. We internally process claims made by our own and third party insureds through our wholly owned claims adjusting company, Superior Adjusting, Inc. We also offer premium financing to our own and third-party insureds through our wholly owned subsidiary, Federated Premium Finance, Inc.

We market and distribute our own and third-party insurers’ products and our other services primarily in Central and South Florida, through a network of 23 agencies owned by Federated Agency Group, Inc., a wholly owned subsidiary, 42 franchised agencies, and approximately 125 independent agents. Through our wholly owned subsidiary, FedUSA, Inc., we franchise agencies under the FedUSA name. As of June 30, 2003, franchises were granted for 42 FedUSA agencies, of which 36 were operating. We intend to focus our future expansion efforts for our agency network on franchised agencies.

Assurance Managing General Agents, Inc., a wholly owned subsidiary, acts as Federated National’s and American Vehicle’s exclusive managing general agent. Assurance MGA currently provides all underwriting policy administration, marketing, accounting and financial services to Federated National, American Vehicle and our agencies, and participates in the negotiation of reinsurance contracts.

We offer electronic tax filing services through Express Tax Service, Inc., an 80%-owned subsidiary, as well as franchise opportunities for these services. As of June 30, 2003, there were 141 franchises granted in ten states. Revenue is generated through franchise sales, collection of royalties on tax preparation fees, incentives from business partners as well as fees from the preparation of income tax returns and income tax refund anticipation loans. In addition, Express Tax offers tax preparation services through more than 500 licensees nationwide, acting as sales representative.

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We believe that we can be distinguished from our competitors because we generate revenue from substantially all aspects of the insurance underwriting, distribution and claims process. We provide quality service to both our agents and insureds by utilizing an integrated computer system, which links our insurance and service entities. Our computer and software systems allow for automated premium quotation, policy issuance, billing, payment and claims processing and enables us to continuously monitor substantially all aspects of our business. Using these systems, our agents can access a customer’s driving record, quote a premium, offer premium financing and, if requested, generate a policy on-site. We believe that these systems have facilitated our ability to market and underwrite insurance products on a cost-efficient basis, allow our owned and fran chised agencies to be a “one stop” shop for insurance, tax preparation and other services, and will enhance our ability to expand in Florida and to other states.

Our primary products are nonstandard and standard personal automobile insurance. Of the total premiums we received in 2002, 96.7% were for nonstandard insurance policies and 3.3% were for standard insurance policies. The former is principally provided to insureds who are unable to obtain preferred or standard insurance coverage because of their payment history, driving record, age, vehicle type or other factors, including market conditions for preferred or standard risks. The latter is principally provided to insureds who present an average risk profile in terms of payment history, driving record, vehicle and other factors. We believe that industry-wide underwriting standards for standard insurance coverage have become more restrictive, thereby requiring more drivers to seek coverage in the nonstandard automobile insurance market. We believe that these factors have contributed to an increase in the size of the nonstandard personal automobile insurance market.

We currently underwrite and sell insurance in Florida and Georgia; however, we intend to expand to other selected states and we have applied to obtain a license to underwrite and sell personal automobile insurance in Alabama and North Carolina. We have also applied in Louisiana for homeowner’s and general liability programs. We will select additional states for expansion based on a number of criteria, including the size of the personal automobile insurance market, statewide loss results, competition and the regulatory climate. Our ability to expand into other states will be subject to receiving prior regulatory approval of each state. Certain states impose operating requirements upon licensee applicants, which may impose burdens on our ability to obtain a license to conduct insurance business in those other states. There can be no assurance that w e will be able to obtain the required licenses, and the failure to do so would limit our ability to expand geographically.

Our executive offices are located at 4161 N.W. 5th Street, Plantation, Florida and our telephone number is (954) 581-9993.

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RISKS OF INVESTING IN OUR SHARES

You should carefully consider the following risks, in addition to the other information presented in this prospectus or incorporated by reference into this prospectus, before making an investment decision. If any of these risks or uncertainties actually occur, our business, results of operations, financial condition, or prospects could be substantially harmed, which would adversely affect your investment.

Risks Related to Our Business

Our revenues and operating performance may fluctuate with business cycles in the property and casualty insurance industry.

Historically, the financial performance of the property and casualty insurance industry has tended to fluctuate in cyclical patterns characterized by periods of significant competition in pricing and underwriting terms and conditions, which is known as a “soft” insurance market, followed by periods of lessened competition and increasing premium rates, which is known as a “hard” insurance market. Although an individual insurance company’s financial performance is dependent on its own specific business characteristics, the profitability of most property and casualty insurance companies tends to follow this cyclical market pattern, with profitability generally increasing in hard markets and decreasing in soft markets. At present, we are experiencing a “hard” market in our automobile and property sectors. We cannot predic t, however, how long these market conditions will persist.

If we are unable to continue our growth by expanding the insurance products we offer and expanding the markets in which we operate, our future financial results may suffer.

We have grown rapidly over the last few years. Our future growth will depend on our ability to underwrite and market additional insurance products and programs through our distribution network and our ability to further expand in the Florida market by franchising additional insurance agencies and establishing relationships with additional independent agents. Additionally, our goal is to expand our operations into other states. Whether we are able to accomplish these goals will depend on:

•

the availability of adequate capital,

•

our ability to obtain necessary regulatory approvals, and

•

our ability to maintain our financial strength ratings.

3

Availability of Capital. We believe that our company is sufficiently capitalized to operate our business as it now exists. Our existing sources of funds include our revolving loan from Flatiron Funding Company LLC, sales of our securities such as our recent private placement of $7,500,000 of our senior subordinated notes, and our earnings from operations and investments. Unexpected catastrophic events in our market areas could result in greater claims losses than anticipated, which could require us to limit or halt our growth while redeploying our capital to pay these unanticipated claims.

Regulatory Approvals. We have applied to the states of Alabama and North Carolina for licenses to underwrite and sell personal automobile insurance, as well as to the State of Louisiana for a license to write homeowner’s and general liability insurance. Although we are unaware at this time of any issues that would prevent us from obtaining these licenses, the state insurance regulators may require additional information, may add conditions to the licenses that we find unacceptable, or may deny our license applications. This would delay or prevent us from operating in those states. If we want to operate in any additional states, we must file similar applications for licenses, which is a time-consuming process that adds to our operating expenses.

Financial Strength Ratings. Third-party ratings agencies assess and rate the ability of insurers to pay its claims. These financial strength ratings are used by the insurance industry to assess the financial strength and quality of insurers. These ratings are based on criteria established by the rating agencies and reflect evaluations of each insurer’s profitability, debt and cash levels, customer base, adequacy and soundness of reinsurance, quality and estimated market value of assets, adequacy of reserves, and management. Ratings are based upon factors of concern to agents, reinsurers and policyholders and are not directed toward the protection of investors, such as purchasers of our common stock.

In 2002, A.M. Best Company assigned Federated National a B rating (“Fair,” which is the seventh of 14 rating categories) and American Vehicle a B+ rating (“Very Good,” which is the sixth of 14 rating categories). Federated National and American Vehicle are rated “A” (“Unsurpassed,” which is first of six ratings) by Demotech, Inc. If our financial condition deteriorates, we may not maintain our ratings. A downgrade or withdrawal of our ratings could severely limit or prevent us from writing or renewing desirable insurance policies or from obtaining adequate reinsurance.

Although we follow the industry practice of reinsuring a portion of our risks, we may not be able to successfully alleviate risk through reinsurance arrangements.

We follow the insurance industry practice of reinsuring a portion of our risks and paying for that protection based upon premiums received on all policies subject to this reinsurance. Our business depends on our ability to transfer or “cede” significant amounts of risk insured by us. Reinsurance makes the assuming reinsurer liable to the extent of the risk ceded. Prevailing market conditions in the property insurance market have limited the availability and increased the cost of reinsurance, which has increased our costs and reduced our profitability. We are also subject to credit risk with respect to our current and future reinsurers, as the ceding of risk to reinsurers does not relieve us of liability to our insureds regarding the portion of the risk that has been reinsured, if the reinsurers fail to pay for any reason. The insolvency of an y reinsurers or their inability to pay claims would increase the claims that we must pay, thereby also harming our results of operations.

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Both Federated National and American Vehicle cede approximately 40% of their premiums from automobile insurance policies to Transatlantic Reinsurance Company. Federated National obtains reinsurance for its property insurance policies on the private market in Bermuda and London and through the Florida Hurricane Catastrophe Fund that reinsures Federated National for liabilities resulting from a storm of $5.5 million to $39.0 million in the aggregate.

Our investment portfolio may suffer reduced returns or losses, which would significantly reduce our earnings.

As do other insurance companies, we depend on income from our investment portfolio for a substantial portion of our earnings. A significant decline in investment yields in our investment portfolio caused by fluctuations in interest rates or volatility in the stock market, or a default by issuers of securities that we own, could adversely affect the value of our investment portfolio and the returns that we earn on our portfolio, thereby substantially harming our financial condition and results of operations. During the time that normally elapses between the receipt of insurance premiums and any payment of insurance claims, we invest the funds received, together with our other available capital, primarily in fixed-maturity investments, mortgage loans and equity securities in order to generate investment income. In 2002, our interest and dividends earned totaled $1.3 million, or 27 % of our total net income of $4.6 million.

We experienced net realized investment losses of $1,369,961 for 2002, $2,911,658 for 2001 and $109,256 for 2000. The net realized losses experienced in 2001 and 2000 were primarily a function of the widely publicized declines in the industrial common stock valuations. As a result of the declines in the equity markets in 2001, we acquired securities in the more conservative and highly rated industrial bond markets in late 2001 and the first half of 2002. During 2002, we incurred a $2,000,000 decline in value of our investment in WorldCom, Inc. bonds. This write down is reflected in the $1,369,961 loss incurred in 2002. We have been experiencing a declining interest rate environment during the past three years. The effect on our bond portfolio of this declining interest rate environment has been to decrease our yields to maturity and the interest income generated accordingly.

Our loss reserves may be inadequate to cover our actual liability for losses, and as a result our results of operations could be adversely affected.

We maintain reserves to cover our estimated ultimate liabilities for loss and loss adjustment expenses. These reserves are estimates based on historical data and statistical projections of what we believe the settlement and administration of claims will cost based on facts and circumstances then known to us. Actual losses and loss adjustment expenses, however, may vary significantly from our estimates. For example, after the Company compared its reserve levels to its actual claims for the prior years, the Company increased its liability for loss and loss adjustment expenses by $90,874 for 2002, by $2,568,476 for 2001, and by $1,444,556 for 2000. These increases reflected primarily the Company’s loss experience under its personal automobile policies. Because of the uncertainties that surround estimated loss reserves, we cannot be certain that our r eserves will be adequate to cover our actual losses. If our reserves for unpaid losses and loss adjustment expenses are less than actual losses and loss adjustment expenses, we will be required to increase our reserves with a corresponding reduction in our net income in the period in which the deficiency is identified. Future loss experience substantially in excess of our reserves for unpaid losses and loss adjustment expenses could substantially harm our results of operations and financial condition.

5

We are subject to significant government regulation, which can limit our growth and increase our expenses, thereby reducing our earnings.

We are subject to laws and regulations of Florida, our state of domicile, and Georgia, and will be subject to the laws of any state in which we conduct business in the future. These laws and regulations cover all aspects of our business and are generally designed to protect the interests of insurance policyholders. For example, these laws and regulations relate to authorized lines of business, capital surplus requirements, allowable rates and forms, investment parameters, underwriting limitations, restrictions upon transactions with affiliates, dividend limitations, changes in control, market conduct, and limitations on premium financing service charges. If we do not comply with the laws and regulations applicable to us, we may be subject to sanctions by the Florida Office of Insurance Regulation or monetary penalties. In addition, we may not be able t o obtain necessary approvals to expand the types of insurance that we offer.

We rely on agents, most of whom are independent agents or franchisees, to write our insurance policies, and if we are not able to attract and retain independent agents and franchisees, our revenues would be negatively affected.

We currently market and distribute Federated National’s, American Vehicle’s and third-party insurers’ products and our other services through a network of 23 agencies that we own, 42 agencies that we franchise to others, and approximately 125 independent agents. Approximately 51% of our insurance products are sold through agents employed by us and franchised agents and approximately 49% of our products are sold through independent agents. Many of our competitors also rely on independent agents. As a result, we must compete with other insurers for independent agents’ business and other franchisors of insurance agencies for franchisees. Our competitors may offer a greater variety of insurance products, lower premiums for insurance coverage, or higher commissions to their agents. If our products, pricing and commissions do not remain c ompetitive, we may find it more difficult to attract business from independent agents and to attract franchisees for our agencies to sell our products. A material reduction in the amount of our products that independent agents sell would negatively affect our revenues.

Our primary insurance product, nonstandard automobile insurance, historically has a higher frequency of claims than standard automobile insurance, thereby increasing our potential for loss exposure beyond what we would be likely to experience if we offered only standard automobile insurance.

Nonstandard automobile insurance, which is our primary product, is provided to insureds who are unable to obtain preferred or standard insurance coverage because of their payment histories, driving records, age, vehicle types, or prior claims histories. This type of automobile insurance historically has a higher frequency of claims than does preferred or standard automobile insurance policies, although the average dollar amount of the claims is usually smaller under nonstandard insurance policies. As a result, we are exposed to the possibility of increased loss exposure and higher claims experience than would be the case if we offered only standard automobile insurance.

6

Florida’s personal injury protection insurance statute contains provisions that favor claimants, causing us to experience a higher frequency of claims than might otherwise be the case if we operated only outside of Florida.

Florida’s personal injury protection insurance statute limits an insurer’s ability to deny benefits for medical treatment that is unrelated to the accident, that is unnecessary, or that is fraudulent. In addition, the statute allows claimants to obtain awards for attorney’s fees. Although this statute has been amended several times in recent years, primarily to address concerns over fraud, the Florida Legislature has been only marginally successful in implementing effective mechanisms that allow insurers to combat fraud and other abuses. We believe that this statute contributes to a higher frequency of claims under nonstandard automobile insurance policies in Florida, as compared to claims under standard automobile insurance policies in Florida and nonstandard and standard automobile insurance polices in other states. Although we believe that we have successfully offset these higher costs with premium increases, because of competition, we may not be able to do so with as much success in the future.

Our business strategy is to avoid competition in our automobile insurance products based on price to the extent possible. This strategy, however, may result in the loss of business in the short term.

Although our pricing is inevitably influenced to some degree by that of our competitors, we believe that it is generally not in our best interest to compete solely on price, choosing instead to compete on the basis of underwriting criteria, our distribution network, and our superior service to our agents and insureds. We compete with respect to automobile insurance in Florida with more than 100 companies, including companies of comparable or smaller size, such as U.S. Security Insurance Company, United Automobile Insurance Company, Direct General Insurance Company and Security National, as well as major insurers such as Progressive Casualty Insurance Company.  If we do not meet the prices offered by our competitors, we may lose business in the short term, which could also result in reduced revenues. We believe, however, that our strategy of avoidi ng price competition is best over the long term because it enables us to maintain a higher standard of services to our policy holders.

With operations concentrated in Florida, we could be adversely affected by unpredictable catastrophic events such as hurricanes and tropical storms.

We write insurance policies that cover automobile owners, homeowners and business owners for losses that result from catastrophes. Catastrophe losses can be caused by hurricanes, tropical storms, tornadoes, wind, hail, fires, riots and explosions, and their incidence and severity are inherently unpredictable. The extent of losses from a catastrophe is a function of two factors: the total amount of the insurance company’s exposure in the area affected by the event and the severity of the event. Our policyholders are currently concentrated in South and Central Florida, which is especially subject to adverse weather conditions such as hurricanes and tropical storms. Although we have not experienced significant claims as a result of a recent hurricane or other weather event, the occurrence of a catastrophe in South Florida could substantially harm us by causing claims to exceed our anticipated reserve for losses.

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Our president and chief executive officer, and our president and chief executive officer of our principal subsidiaries, are key to the strategic direction of our company. If we were to lose the services of either of them, our business could be harmed.

We depend, and will continue to depend, on the services of one of our founders and principal shareholders, Edward J. Lawson, who is also our president and chairman of the board, as well as Richard Widdicombe, who is our chief executive officer. We have entered into an employment agreement with each of them and we maintain $3 million and $1 million in key life insurance on the lives of Mr. Lawson and Mr. Widdicombe, respectively. Nevertheless, because of Mr. Lawson’s and Mr. Widdicombe’s role and involvement in developing and implementing our current business strategy, the loss of either of their services could substantially harm our business.

Risks Related to an Investment in Our Shares

The trading of warrants may negatively affect the trading prices of our common stock.

We intend to list the warrants for trading on the Nasdaq National Market; we cannot assure you, however, that the warrants will be approved for trading. Each of the warrants entitles the holder to purchase one-half of one share of our common stock at an exercise price per share determined 60 trading days after July 31, 2006, which was the date of issuance of the warrants. If the warrants are listed for trading, the trading of the warrants may negatively affect the trading prices of our common stock due to certain potential investment strategies that may be used by holders of the warrants.

Our largest shareholders control approximately 32% of the voting power of our outstanding common stock, which could discourage potential acquirors and prevent changes in management.

Edward J. Lawson and Michele V. Lawson beneficially own approximately 32% of our outstanding common stock. As our largest shareholders, and our only shareholders owning more than 10% of our stock, the Lawsons have significant influence over the outcome of any shareholder vote. This voting power may discourage takeover attempts, changes in management or other changes in our corporate governance that other shareholders may desire.

We have authorized but unissued preferred stock, which could affect rights of holders of common stock.

Our articles of incorporation authorize the issuance of preferred stock with designations, rights and preferences determined from time to time by our board of directors. Accordingly, our board of directors is empowered, without shareholder approval, to issue preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of common stock. In addition, the preferred stock could be issued as a method of discouraging a takeover attempt. Although we do not intend to issue any preferred stock at this time, we may do so in the future.

8

Our articles of incorporation and bylaws and Florida law may discourage takeover attempts and changes in management.

Our articles of incorporation and bylaws contain provisions that may discourage takeover attempts and may prevent changes in management.

•

Our board of directors is elected in classes, with only two or three of the directors elected each year. As a result, shareholders would not be able to change the membership of the board in its entirety in any one year.

•

Our articles of incorporation prohibit shareholders from acting by written consent, meaning that shareholders will be required to conduct a meeting in order to vote on any proposals or take any action.

•

Our bylaws require at least 60 days’ notice if a shareholder desires to submit a proposal for a shareholder vote or to nominate a person for election to our board of directors.

In addition, Florida has enacted legislation that may deter or frustrate takeovers of Florida corporations, such as our company.

•

The Florida Control Share Act provides that shares acquired in a “control share acquisition” will not have voting rights unless the voting rights are approved by a majority of the corporation’s disinterested shareholders. A “control share acquisition” is an acquisition, in whatever form, of voting power in any of the following ranges: (a) at least 20% but less than 33-1/3% of all voting power, (b) at least 33-1/3% but less than a majority of all voting power; or (c) a majority or more of all voting power.

•

The Florida Affiliated Transactions Act requires supermajority approval by disinterested shareholders of certain specified transactions between a public corporation and holders of more than 10% of the outstanding voting shares of the corporation (or their affiliates).

As a holding company, we depend on the earnings of our subsidiaries and their ability to pay dividends to the holding company as the primary source of our income.

We are an insurance holding company whose primary assets are the stock of our subsidiaries. Our operations, and our ability to service our debt, are limited by the earnings of our subsidiaries and their payment of their earnings to us in the form of management fees, dividends, loans, advances or the reimbursement of expenses. These payments can be made only when our subsidiaries have adequate earnings. In addition, these payments made to us by our insurance subsidiaries are restricted by Florida law governing the insurance industry. Generally, Florida law limits the dividends payable by insurance companies under complicated formulas based on the subsidiary’s available capital and earnings. Under these formulas, Federated National would be able to pay approximately $200,000 in dividends in 2004 and American Vehicle would be able to pay approximate ly $70,000 in dividends in 2004. Florida law does authorize the Florida Office of Insurance Regulation to approve dividends that exceed the formula amounts.

9

No dividends were declared or paid by our subsidiaries in 2002, 2001 or 2000. Whether our subsidiaries will be able to pay dividends in 2003 depends on the results of their operations and their expected needs for capital. If our subsidiaries continue to achieve net income at current levels and conditions in the insurance markets remain relatively consistent, then we anticipate that our subsidiaries will begin to pay dividends to our company in 2003.

Historically, the operations and financing obligations of 21^st Century as the parent company have required approximately $1.3 million per year. We anticipate that some of our obligations will be met through future dividends from our subsidiaries and the remainder from our existing sources of capital, such as our line of credit. The most likely reason why we would not be able to meet our obligations is if a catastrophic event expected to occur no more often than once in every 100 years were actually to occur and simultaneously, our reinsurance arrangements were to fail. If we need additional sources of capital, we currently expect that we would offer our securities to investors or obtain financing secured by our assets.

NOTE REGARDING FORWARD LOOKING STATEMENTS

Statements in this prospectus or in documents that are incorporated by reference that are not historical fact are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” or “continue” or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements. The risks and uncertainties include, but are not limited to, the risks and uncertainties described in the prospectus or from time to time in our filings with the SEC.

USE OF PROCEEDS

We will receive proceeds of $_________ per share if the warrants are exercised. The likelihood of our receiving any proceeds from the exercise of the warrants increases as the market price of our common stock rises above the warrant exercise price. If all the warrants are exercised, we will receive net proceeds of approximately $___________ after deducting approximately $__________ in expenses in connection with the registration statement. Such proceeds, if any, will be used for working capital and general corporate purposes.

We will not receive any proceeds from the sale of the warrants prior to exercise or the sale of the common stock issued when the warrants are exercised.

10

SELLING SECURITY HOLDERS

The following table shows certain information as of the date of this prospectus regarding the number of shares of common stock and the number of warrants owned by the selling security holders and that are included for sale in this prospectus.  The number of shares of common stock owned reflected in the first table below assumes that no warrants are sold prior to exercise and that all warrants owned are exercised. Both of these tables also assume that all shares or warrants offered for sale in the prospectus are sold.

No selling security holder has been within the last three years, or is currently, affiliated with us.

Selling Shareholder	Ownership of Common Stock Before Offering		Number Offered By Selling Shareholder	Ownership of Common Stock After Offering
	Number	Percent		Number	Percent
Coastal Convertibles LTD	50,000	1.6%	50,000	0	*
J. Giordano Securities, LLC	20,000	*	20,000	0	*
Omicron Master Trust	33,333	1.1%	33,333	0	*
OTAPE Investments LLC	16,667	*	16,667	0	*
Newport Alternative Income Fund	6,667	*	6,667	0	*
Pandora Select Advisors, LLC	66,667	2.1%	66,667	0	*
SilverCreek II Limited	18,667	*	18,667	0	*
SilverCreek Limited Partnership	41,333	1.3%	41,333	0	*
Whitebox Convertible  Arbitrage Partners, LP	133,333	4.1%	133,333	0	*
Whitebox Hedged High  Yield Partners, LP	133,333	4.1%	133,333	0	*

————————

*

Less than 1%.

Selling Warrant Holder	Ownership of Warrants Before Offering		Number Offered By Selling Warrant Holder	Ownership of Warrants After Offering
	Number	Percent		Number	Percent
Coastal Convertibles LTD	100,000	9.6%	100,000	0	*
J. Giordano Securities, LLC	40,000	3.8%	40,000	0	*
Omicron Master Trust	66,667	6.4%	66,667	0	*
OTAPE Investments LLC	33,333	3.2%	33,333	0	*
Newport Alternative Income Fund	13,333	1.3%	13,333	0	*
Pandora Select Advisors, LLC	133,333	12.8%	133,333	0	*
SilverCreek II Limited	37,333	3.6%	37,333	0	*
SilverCreek Limited Partnership	82,667	7.9%	82,667	0	*
Whitebox Convertible  Arbitrage Partners, LP	266,667	25.6%	266,667	0	*
Whitebox Hedged High  Yield Partners, LP	266,667	25.6%	266,667	0	*

————————

*

Less than 1%.

The percentage of outstanding warrants shown in the table above do not include a warrant issued previously in a separate transaction.

The selling security holders listed above have provided us with additional information regarding the individuals or entities that exercise control over the selling security holder.  The proceeds of any sale of shares or warrants pursuant to this prospectus will be for the benefit of

11

the individuals that control the selling entity. The following is a list of the selling security holders and the entities that may exercise the right to vote or dispose of the shares or warrants owned by each selling security holder:

•

Coastal Convertibles LTD is managed by Tradewinds.

•

J. Giordano Securities, LLC is controlled by James Giordano.

•

Omicron Master Trust is managed by Omicron.

•

OTAPE Investments, LLC is managed by OTA.

•

Each of Newport Alternative Income Fund, SilverCreek II Limited and SilverCreek Limited Partnership is managed by SilverCreek.

•

Each of Pandora Select Partners, LP, Whitebox Convertible Arbitrage Partners, LP and Whitebox Hedged High Yield Partners, LP is managed by Whitebox Advisors, LLC.

OUR SECURITIES

Our authorized capital stock will consist of (i) 25,000,000 shares of common stock, par value $.01 per share, 3,210,870 shares of which are currently outstanding, and (ii) 1,000,000 shares of preferred stock, par value $.01 per share, none of which are outstanding.

Common Stock

Subject to the rights of the holders of any preferred stock that may be outstanding, each holder of our common stock on the applicable record date is entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefor, and, in the event of liquidation, to share pro rata in any distribution of our assets after payment of providing for the payment of liabilities and the liquidation preference of any outstanding preferred stock. Each holder of our common stock is entitled to one vote for each share held of record on the applicable record date on all matters presented to a vote of shareholders, including the election of director. Holders of our common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any stock or other securities, and there are no conversion rights o r redemption or sinking fund provisions with respect to such stock. All outstanding shares of our common stock are, and the shares of our common stock offered hereby will be, when issued, fully paid and nonassessable.

Preferred Stock

Our Board of Directors has the authority to issue 1,000,000 shares of preferred stock in one or more series and to fix, by resolution, conditional, full, limited or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, including the number of shares in such series (which the Board may increase or decrease as permitted by Florida law), liquidation preferences, dividend rates, conversion or exchange rights, redemption provisions of the shares constituting any series and such other special rights and protective provisions with respect to any class or series as the Board may deem advisable without any further vote or action by the shareholders. Any shares of preferred stock so issued would have priority over our common stock with respect to dividend or liquidation rights or both and could have voting and other rights of shareholders. We have no present plans to issue shares of preferred stock.

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Warrants

We issued the warrants to purchase shares of our common stock that are covered by this prospectus in a private offering on July 31, 2003. Each of the warrants entitles the registered holder to purchase one-half of one share of our common stock. The exercise price of the warrants will be equal to 115% of the weighted-average volume price of our common stock on Nasdaq as reported by Bloomberg Financial Markets for the 60 consecutive trading days following July 31, 2003, with a maximum exercise price of $25.00 per share and a minimum exercise price of $15.00 per share. The exercise price and the number of shares issuable upon exercise of the warrants are subject to adjustment in certain circumstances. Our warrants may be exercised until July 31, 2006, after which time warrant holders will have no further rights in the warrants.

We may redeem some or all of our outstanding warrants beginning July 31, 2004 for $0.01 per warrant at any time on 30 days’ prior written notice if the closing bid price of our common stock is 150% of the exercise price for 20 consecutive trading days.

We had previously issued warrants to purchase 125,000 shares of our common stock to Guilford Securities Incorporated, the managing underwriter of our initial public offering.  These warrants have an exercise price of $10.875 per share, are transferable by Guilford, and expire on November 10, 2003.  The exercise price and the number of shares issuable upon exercise of the warrants are subject to adjustment in certain circumstances.

Certain Florida Legislation

Florida has enacted legislation that may deter or frustrate takeovers of Florida corporations.  The Florida Control Share Act generally provides that shares acquired in a “control share acquisition” will not possess any voting rights unless such voting rights are approved by a majority of the corporation’s disinterested shareholders.  A “control share acquisition” is an acquisition, directly or indirectly, by any person of ownership of, or the power to direct the exercise of voting power with respect to, issued and outstanding “control shares” of a publicly held Florida corporation.  “Control shares” are shares, which, except for the Florida Control Share Act, would have voting power that, when added to all other shares owned by a person or in respect to which such person may exercise or dire ct the exercise of voting power, would entitle such person, immediately after acquisition of such shares, directly or indirectly, alone or as a part of a group, to exercise or direct the exercise of voting power in the election of directors within any of the following ranges:  (i) at least 20% but less than 33-1/3% of all voting power; (ii) at least 33-1/3% but less than a majority of all voting power; or (iii) a majority or more of all voting power. The Florida Affiliated Transactions Act generally requires supermajority approval by disinterested shareholders of certain specified transactions between a public corporation and holders of more than 10% of the outstanding voting shares of the corporation (or their affiliates).  Florida law and our articles of incorporation and bylaws also authorize us to indemnify our directors, officers, employees and agents.  In addition, our articles and Florida law currently limit the personal liability of corporate directors for monetary damages, except wher e the directors (i) breach their fiduciary duties, and (ii) such breach constitutes or includes certain violations of criminal law, a transaction from which the directors derived an improper personal benefit, certain unlawful distributions, or certain other reckless, wanton or willful acts or misconduct.

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Anti-Takeover Effects of Certain Provisions of Our Articles of Incorporation and Bylaws

Certain provision of our articles of incorporation and bylaws may be deemed to have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt, including attempts that might result in a premium being paid over the market price for the shares held by shareholders. The following provisions may not be amended in our articles or bylaws without the affirmative vote of the holders of two-thirds of the outstanding shares of our common stock.

Classified Board of Directors. The articles and bylaws provide for the Board of Directors to be divided into three classes serving staggered terms. As a result, approximately one-third of the Board of Directors will be elected each year. The articles and bylaws also provide that directors may only be removed for cause and only upon the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock entitled to vote. These provisions, when coupled with the provision of the articles and bylaws authorizing only the Board of Directors to fill vacant directorships or increase the size of the Board, may deter a shareholder from removing incumbent directors and simultaneously gaining control of the Board of Directors by filling the vacancies created by such removal with its own nominees.

Prohibition of Action by Unanimous Consent; Special Meeting of Shareholders. The articles and bylaws prohibit the taking of shareholder action by written consent without a meeting and provide that special meetings of shareholders be called only by a majority of the Board of Directors, our Chief Executive Officer or holders of not less than one-third of our outstanding voting stock.

Advance Notice Requirements for Shareholder Proposals and Director Nominations. The bylaws provide that shareholders seeking to bring business before an annual meeting of shareholders, or to nominate candidates for election as directors at an annual or special meeting of shareholders, must provide timely notice thereof in writing. To be timely, a shareholder’s notice must be delivered to or mailed and received at our principal executive offices not less than 60 days nor more than 90 days prior to the meeting. If less than 70 days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, however, notice by the shareholder, to be timely, must be received no later than the close of business on the 10^th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever is first. The bylaws also specify certain requirements as to the content and form of a shareholder’s notice. These provisions may preclude shareholders from bringing matters before the shareholders at an annual or special meeting or from making nomination for directors at an annual or special meeting.

Amendment of Bylaws. Except for the provisions identified above requiring a two-thirds vote of the outstanding shares to alter, amend or repeal, the bylaws may only be altered, amended or repealed by the Board or the affirmative vote of the holders of at least a majority of our outstanding shares of capital stock.

Transfer Agent

The transfer agent for our common stock is X-Clearing Corporation, Denver, Colorado.

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HOW THE SHARES AND WARRANTS MAY BE DISTRIBUTED

The selling security holders may sell shares of common stock and warrants in various ways and at various prices.  Some of the methods by which the selling security holders may sell shares and warrants include:

•

ordinary brokerage transactions and transactions in which the broker solicits purchasers or makes arrangements for other brokers to participate in soliciting purchasers;

•

privately negotiated transactions;

•

block trades in which the broker or dealer will attempt to sell the shares or warrants as agent but may position and resell a portion of the block as principal to facilitate the transaction;

•

purchases by a broker or dealer as principal and resale by that broker or dealer for the selling security holder’s account under this prospectus on the Nasdaq National Market at prices and on terms then-prevailing in the market;

•

sales under Rule 144, if available, rather than using this prospectus;

•

a combination of any of these methods of sale; and

•

any other legally permitted method.

The applicable sales price may be affected by the type of transaction.

The selling security holders may also pledge shares as collateral for margin loans under their customer agreements with their brokers.  If there is a default by a selling security holder, the broker may offer and sell the pledged shares.  When selling shares and warrants, the selling security holders intend to comply with the prospectus delivery requirements under the Securities Act, by delivering a prospectus to each purchaser.  We may file any supplements, amendments or other necessary documents in compliance with the Securities Act that may be required in the event a selling security holder defaults under any customer agreement with brokers.

Brokers and dealers may receive commissions or discounts from the selling security holders or, in the event the broker-dealer acts as agent for the purchaser of the shares or warrants, from that purchaser, in amounts to be negotiated.  These commissions are not expected to exceed those customary in the types of transactions involved.

We cannot estimate at the present time the amount of commissions or discounts, if any, that will be paid by the selling security holders in connection with the sales of the shares or the warrants.

The selling security holders and any broker-dealers or agents that participate with a selling security holder in sales of the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales.  In that event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

15

Under the securities laws of certain states, the shares and warrants may be sold in those states only through registered or licensed broker-dealers.  In addition, the shares and warrants may not be sold unless the shares and warrants have been registered or qualified for sale in the relevant state or unless the shares and warrants qualify for an exemption from registration or qualification.

We have agreed to pay all of our out-of-pocket expenses and our professional fees and expenses incident to the registration of the shares and warrants.

The selling security holders and other persons participating in the distribution of the shares offered under this prospectus are subject to the applicable requirements of Regulation M promulgated under the Exchange Act in connection with sales of the shares and warrants.

LEGAL MATTERS

Broad and Cassel, a partnership including professional associations, Miami, Florida, is issuing an opinion regarding the validity of the offered shares of common stock and warrants.

EXPERTS

The financial statements of 21^st Century Holding Company for the year ended December 31, 2002, incorporated by reference in this prospectus, have been audited by De Meo, Young, McGrath, independent certified public accountants, to the extent and for the periods set forth in their report incorporated herein by reference, and are incorporated herein in reliance upon such reports given upon the authority of said firm as experts in auditing and accounting.

The financial statements of 21^st Century Holding Company for the years ended December 31, 2001 and 2000, incorporated by reference in this prospectus, have been audited by McKean, Paul, Chrycy, Fletcher & Co., independent certified public accountants, to the extent and for the periods as indicated in their report with respect thereto, and are incorporated herein in reliance upon the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-3 with the SEC in connection with this offering. This prospectus does not contain all of the information set forth in the registration statement, as permitted by the rules and regulations of the SEC. This prospectus may include references to material contracts or other material documents of ours; any summaries of these material contracts or documents are complete and are either included in this prospectus or incorporated by reference into this prospectus. You may refer to the exhibits that are part of the registration statement for a copy of the contract or document.

We also file annual, quarterly and current reports and other information with the SEC. You may read and copy any report or document we file, and the registration statement, including the exhibits, may be inspected at the SEC’s public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public from the SEC’s website at http://www.sec.gov.

16

Quotations for the prices of our common stock appear on the Nasdaq National Market, and reports, proxy statements and other information about us can also be inspected at the offices of the National Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents are incorporated by reference into this prospectus:

•

Our Annual Report on Form 10-K for the year ended December 31, 2002, as amended,

•

Our proxy statement for our 2003 Annual Meeting of Shareholders,

•

Our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2003, as amended, and for the quarter ended June 30, 2003, and

•

The description of our common stock contained in our registration statement on Form 8-A filed with the SEC on October 28, 1998, as this description may be updated in any amendment to the Form 8-A.

In addition, all documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, other than information furnished pursuant to Items 9 or 12 of Form 8-K, after the date of this prospectus and prior to the filing of a post-effective amendment that indicates that all securities registered hereby have been sold or that deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this prospectus and to be a part hereof from the date of filing of such documents with the SEC. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein, or in a subsequently filed document incorporated by reference herein, modifies or supersedes that stateme nt. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this prospectus.

You may obtain a copy of these filings, excluding all exhibits unless we have specifically incorporated by reference an exhibit in this prospectus or in a document incorporated by reference herein, at no cost, by writing or telephoning:

21st Century Holding Company

4161 N.W. 5th Street

Plantation, Florida 33317

Attention: James A. Epstein, General Counsel

Telephone: (954) 581-9993

Our file number under the Securities Exchange Act of 1934 is 0-2500111.

17

INDEMNIFICATION OF DIRECTORS AND OFFICERS

We have authority under Section 607.0850 of the Florida Business Corporation Act to indemnify our directors and officers to the extent provided for in such law. Our articles of incorporation provide that we may insure, shall indemnify and shall advance expenses on behalf of our officers and directors to the fullest extent not prohibited by law. We also are a party to indemnification agreements with each of our directors and officers.

The SEC is of the opinion that indemnification of directors, officers and controlling persons for liabilities arising under the Securities Act is against public policy and is, therefore, unenforceable.

18

PART II

INFORMATION REQUIRED IN PROSPECTUS

Item 14.

Other Expenses of Issuance and Distribution.

The Registrant estimates that its expenses in connection with this registration statement will be as follows:

SEC registration fee	$	1,051.70
Accounting fees and expenses (A)		(B)
Legal fees and expenses (A)		(B)
Printing expenses (A)		(B)
Miscellaneous (A)		(B)
Total	$

——————

(A)

All amounts except the Securities and Exchange Commission registration fee are estimated.

(B)

To be provided by amendment.

Item 15.

Indemnification of Directors and Officers.

The Registrant has authority under Section 607.0850 of the Florida Business Corporation Act to indemnify its directors and officers to the extent provided for in such law. The Registrant’s Amended and Restated Articles of Incorporation provide that the Registrant may insure, shall indemnify and shall advance expenses on behalf of its officers and directors to the fullest extent not prohibited by law. The Registrant is also a party to indemnification agreements with each of its directors and officers.

Item 16.

Exhibits.

4.1

Specimen of Common Stock Certificate ⁽¹⁾

4.2

Revised Representative’s Warrant Agreement including form of Representative’s Warrant⁽¹⁾

4.3

Form of 6% Senior Subordinated Note due July 31, 2006⁽²⁾

4.4

Form of Redeemable Warrant dated July 31, 2003⁽²⁾

4.5

Unit Purchase Agreement dated July 31, 2003 between the Company and the purchasers of the 6% Senior Subordinated Notes due July 31, 2003⁽³⁾

5.1

Opinion of Broad and Cassel⁽³⁾

23.1

Consent of Broad and Cassel (included in its opinion filed as Exhibit 5.1)⁽³⁾

23.2

Consent of McKean, Paul, Chrycy, Fletcher & Co.⁽³⁾

23.3

Consent of De Meo, Young, McGrath⁽³⁾

25.1

Power of Attorney (included on the signature page to this Registration Statement)⁽³⁾

——————

(1)

Previously filed as exhibit of the same number to the Registrant’s Registration Statement on Form SB-2 (File No. 333-63623) and incorporated herein by reference.

(2)

Previously filed as Exhibits 4.1 and 4.2, respectively, to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.

(3)

Filed herewith.

II-1

Item 17.

Undertakings

The undersigned Registrant hereby undertakes:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(a)

To include any prospectus required by section 10(a)(3) of the Securities Act of 1933, as amended;

(b)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and

(c)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matte r has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

II-2

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Plantation, State of Florida on this 30th day of September, 2003.

21^st CENTURY HOLDING COMPANY

By: /s/ RICHARD A. WIDDICOMBE

Richard A. Widdicombe,

Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Edward J. Lawson and Richard A. Widdicombe, or any one of them, as his or her true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution for him or her and in his or her name, place and stead in any and all capacities to execute in the name of each such person who is then an officer or director of the Registrant any and all amendments (including post-effective amendments) to this Registration Statement, and any registration statement relating to the offering hereunder pursuant to Rule 462 under the Securities Act of 1933 and to file the same with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them full power and au thority to do and perform each and every act and thing required or necessary to be done in and about the premises as fully as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated.

Signatures	Title	Date
/s/ EDWARD J. LAWSON Edward J. Lawson	Chairman of the Board of Directors and President	September 30, 2003
/s/ RICHARD A. WIDDICOMBE Richard A. Widdicombe	Chief Executive Officer and Director  (Principal Executive Officer)	September 30, 2003
/s/ JAMES G. JENNINGS, III James G. Jennings, III	Chief Financial Officer (Principal Financial and Accounting Officer)	September 30, 2003

II-3

Signatures	Title	Date
/s/ CARL DORF Carl Dorf	Director	September 30, 2003
/s/ CHARLES B. HART, Jr. Charles B. Hart, Jr.	Director	September 30, 2003
/s/ BRUCE SIMBERG Bruce Simberg	Director	September 30, 2003
/s/ JAMES DEPELISI James DePelisi	Director	September 30, 2003
/s/ RICHARD W. WILCOX, JR. Richard W. Wilcox, Jr.	Director	September 30, 2003

II-4

EXHIBIT INDEX

Exhibit

Description

4.5

Unit Purchase Agreement dated July 31, 2003 between the Company and the purchasers of the 6% Senior Subordinated Notes due July 31, 2003

5.1

Opinion of Broad and Cassel

23.1

Consent of Broad and Cassel (included in Exhibit 5.1)

23.2

Consent of McKean, Paul, Chrycy, Fletcher & Co.

23.3

Consent of De Meo, Young, McGrath

Power of Attorney (included on the signature page to this Registration Statement)

EX-4.5

Exhibit 4.5

21^st CENTURY HOLDING COMPANY

4161 N.W. 5^TH STREET

PLANTATION, FL 33317

UNIT PURCHASE AGREEMENT

TO THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

21^st Century Holding Company, a Florida corporation (the “Company”), agrees with the Purchasers listed in the attached Schedule A (the “Purchasers”) to this Unit Purchase Agreement (this “Agreement”) as follows:

SECTION 1.  CERTAIN DEFINITIONS.

As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:

“Affiliate” means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of equity interests.  As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Business Day” means any day other than a Saturday, a Sunday or a day on which the Nasdaq National Market (“Nasdaq”) is required or authorized to be closed.

“Capital Lease” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.

“Capital Lease Obligation” means, with respect to any Person and a Capital Lease, the amount of the obligation of such Person as the lessee under such Capital Lease which would, in accordance with GAAP, appear as a liability on a balance sheet of such Person.

“Change of Control” is defined in Section 7.2(h).

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“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.

“Confidential Information” is defined in Section 20.

“Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.

“Eligible Subsidiary” means each of the Company’s Subsidiaries, except such Subsidiaries which are regulated by the Florida Department of Financial Service or successor entity.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, at any time and with respect to any property, the sale value of such property that would be realized in an arm's-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell), as reasonably determined in the good faith opinion of the Company's board of directors.

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.

“Guarantor” shall mean those certain Eligible Subsidiaries of the Company which shall be a party to a Subsidiary Guarantee.

“Guaranty” means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person:  (a) to purchase such Indebtedness or obligation or any property constituting security therefor primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of any other Person to make payment of the Indebtedness or obligation; (b) to advance or supply funds (i) for the purchase or payment of such Indebtedness or obligation, or (ii) to mai ntain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of any other Person to make payment of the Indebtedness or obligation; or (d) otherwise to assure the owner of such Indebtedness or obligation against loss in respect thereof.

In any computation of the Indebtedness or other liabilities of the obligor under any Guaranty, the Indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor, provided that the amount of such Indebtedness outstanding for purposes of this Agreement shall not be exceed the maximum amount of Indebtedness that is the subject of such Guaranty.

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“Holder” means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 14.1.

“Indebtedness” means, with respect to any Person, without duplication, (a) all liabilities of such Person for borrowed money (including overdrafts) or for the deferred purchase price of property or services, excluding any trade payables and other accrued current liabilities incurred in the ordinary course of business, but including, without limitation, all obligations, contingent or otherwise, of such Person in connection with any letters of credit and acceptances issued under letter of credit facilities, acceptance facilities or other similar facilities, (b) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments, (c) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person ( even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), but excluding trade payables arising in the ordinary course of business, (d) all Capitalized Lease Obligations of such Person, (e) all Indebtedness referred to in (but not excluded from) the preceding clauses of other Persons and all dividends of other Persons, the payment of which is secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or with respect to property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness (the amount of such obligation being deemed to be the lesser of the Fair Market Value of such property or asset or the amount of the obligation so secured), and (f) all guarantees by such Person of Indebtedness referred to in this definit ion of any other Person.

“Interest Shares” is defined in Section 9.

“Investments” shall mean all investments, in cash or by delivery of property made, directly or indirectly in any Person, whether by acquisition of shares of capital stock, indebtedness or other obligations or securities or by loan, advance, capital contribution or otherwise.

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person.

“Material” means material in relation to the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement, the Notes and the Warrants, or (c) the validity or enforceability of this Agreement, the Notes or the Warrants.

“Notes” is defined in Section 2.

“Offering Document” is defined in Section 6.3.

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“Permitted Indebtedness” means any of the following:

(a)

Indebtedness of the Company or its Subsidiary outstanding as of the date hereof;

(b)

Indebtedness of the Company pursuant to the Notes issued at Closing or of any Subsidiary pursuant to the Subsidiary Guarantee;

(c)

Indebtedness of the Company owing to any Subsidiary; provided that any Indebtedness of the Company owing to any such Subsidiary is unsecured and is subordinated in right of payment from and after such time as the Notes shall become due and payable to the payment and performance of the Company’s obligations under the Notes; provided further that any disposition, pledge or transfer of any such Indebtedness to a Person (other than a disposition, pledge or transfer to the Company or another Subsidiary) shall be deemed to be an incurrence of such Indebtedness by the Company not permitted by this clause (c);

(d)

Indebtedness of a Subsidiary owing to the Company or to another Subsidiary; provided that any such Indebtedness of any Subsidiary is subordinated in right of payment to the Guaranty of such Subsidiary; provided further that any disposition, pledge or transfer of any such Indebtedness to a Person (other than a disposition, pledge or transfer to the Company or a Subsidiary) shall be deemed to be an incurrence of such Indebtedness by such Subsidiary not permitted by this clause (d);

(e)

Indebtedness of the Company or any Subsidiary in respect of purchase money obligations, Capitalized Lease Obligations of the Company or any Subsidiary and Subordinated Indebtedness of the Company or any Subsidiary in an aggregate amount which does not exceed $5 million at any one time outstanding;

(f)

Indebtedness of the Company or any Subsidiary consisting of guarantees, indemnities or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets, including, without limitation, shares of capital stock of Subsidiaries;

(g)

Indebtedness of the Company or any Subsidiary represented by (x) letters of credit for the account of the Company or any Subsidiary or (y) other obligations to reimburse third parties pursuant to any surety bond or other similar arrangements, which letters of credit or other obligations, as the case may be, are intended to provide security for workers’ compensation claims, payment obligations in connection with self-insurance or other similar requirements in the ordinary course of business; and

(h)

Any renewals, extensions, substitutions, refinancings or replacements (each, for purposes of this clause, a “refinancing”) of any Indebtedness, referred to herein, including any successive refinancings, so long as (i) any such new Indebtedness shall be in a principal amount that does not exceed the principal amount (or, if such Indebtedness being refinanced provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, such lesser amount as of the date of determination) so refinanced, plus the lesser of the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Indebtedness refinanced or the amount of any

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premium reasonably determined as necessary to accomplish such refinancing, (ii) in the case of any refinancing by the Company of Subordinated Indebtedness, such new Indebtedness is made pari passu with or subordinate to the Notes at least to the same extent as the Indebtedness being refinanced, and (iii) in the case of any refinancing by any Subsidiary of Subordinated Indebtedness, such new Indebtedness is made pari passu with or subordinate to the Guaranty of such Guarantor at least to the same extent as the Indebtedness being refinanced.

“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.

“Prepayment Shares” is defined in Section 7.2(d).

“Principal Shares” is defined in Section 7.1.

“Property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.

“Purchasers” means the purchasers of the Units named in Schedule A hereto.

“Required Holders” means, at any time, the holders of at least 51% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).

“Responsible Officer” means any officer of the Company with responsibility for the administration of the relevant portion of this Agreement.

“Sale and Leaseback Transaction” means any transaction or series of related transactions pursuant to which the Company or a Subsidiary sells or transfers any property or asset in connection with the leasing of such property or asset to the seller or transferor.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Senior Indebtedness” means the principal of, premium, if any, and interest on all other Indebtedness of the Company (other than the Notes), whether outstanding on the date of Closing or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes.  Notwithstanding the foregoing, “Senior Indebtedness” shall not include (i) Indebtedness evidenced by the Notes, (ii) Indebtedness of the Company that is expressly subordinated in right of payment to any Senior Indebtedness of the Company or the Notes, (iii) Indebtedness of the Company that by operation of law is subordinate to any general unsecured obli gations of the Company, (iv) Indebtedness of the Company to the extent incurred in violation of any covenant of this Agreement, (v) any liability for federal, state or local taxes or other taxes, owed or owing by the Company, (vi) Indebtedness for goods, materials or services purchased in the ordinary course of business or Indebtedness consisting of trade account payables or other current

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 liabilities (other than the current portion of long-term Indebtedness which would constitute Senior Indebtedness but for the operation of this clause (vi)), (vii) amounts owed by the Company for compensation to employees or for services rendered to the Company, (viii) Indebtedness of the Company to any Subsidiary or any other Affiliate of the Company or any such Affiliate’s Subsidiaries, (ix) amounts owing under leases and (x) Indebtedness which when incurred and without respect to any election under Section 1111(b) of Title 11 of the United States Code is without recourse to the Company or any Subsidiary.

“Subordinated Indebtedness” means, as of the date of any determination thereof, all unsecured Indebtedness of the Company which shall contain or have applicable thereto subordination provisions providing for the subordination thereof to other the Indebtedness of the Company (including, without limitation, the Notes).

“Subsidiary” means, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries).  Unless the context otherwise clearly requires, any r eference to a “Subsidiary” is a reference to a Subsidiary of the Company.

“Subsidiary Guarantee” is defined in Section 3.2.

“Transaction Shares” means collectively, the Principal Shares, the Interest Shares, the Prepayment Shares and the Warrant Shares.

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

SECTION 2.  AUTHORIZATION OF UNITS.

3.1

Units.  Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at the Closing provided for in Section 4, such number of Units specified opposite such Purchaser's name in Schedule A at the aggregate Subscription Price.  The obligations of each Purchaser hereunder are several and not joint obligations and each Purchaser shall have no

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obligation and no liability to any Person for the performance or nonperformance by any other Purchaser hereunder.

3.2

Subsidiary Guarantee.  The payment by the Company of all amounts due with respect to the Notes and the performance by the Company of its obligations under this Agreement will be unconditionally guaranteed by all Eligible Subsidiaries of the Company (the “Guarantors”) under the subsidiary guarantee (the “Subsidiary Guarantee”) which shall be in substantially the form attached hereto as Exhibit C.

SECTION 4.  CLOSING.

The sale and purchase of the Units to be purchased by each Purchaser shall occur at 10:00 am Miami time, at a closing (the “Closing”) on August 5, 2003 or on such other Business Day as may be agreed upon by the Company and the Purchasers.  At the Closing, the Company will deliver to J. Giordano Securities, LLC, as agent for each Purchaser, the Units to be purchased by such Purchaser dated the date of the Closing and registered in such Purchaser's name, against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the Subscription Price therefor by wire transfer of immediately available funds for the account of the Company to account number 9660323321, account name 21^st Century Holding Company Operating, at Union Planters Bank, ABA Number 067008414.  If at the Closing the Company shall fail to tender such Units to any Purchaser as provided above in this Section 4, such Purchaser shall, at such Purchaser's election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.

SECTION 5.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each Purchaser that:

5.1

Organization.  The Company is a corporation duly organized, validly existing and in good standing under the laws of Florida with full power and authority to own, lease, license and use its properties and assets and to carry out the businesses in which it is engaged in.  The Company is duly qualified to transact the business in which it is engaged and is in good standing as a foreign corporation in every jurisdiction in which its ownership, leasing, licensing or use of property or assets or the conduct of its business make such qualification necessary, except where the failure to be so qualified would not individually or in the aggregate have a Material Adverse Effect.

5.2

Power and Authorization.  The Company has all requisite power and authority to (i) execute, deliver and perform its obligations under this Agreement; and (ii) to issue and sell the Units.  All necessary corporate proceedings of the Company have been duly taken to authorize the execution, delivery, and performance of this Agreement.  This Agreement has been duly authorized by the Company and, when executed and delivered by the Company, will constitute the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting creditors’ rights generally; (ii) as enforceability of any indemnification, contribution or

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exculpation provision may be limited under applicable federal and state securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

5.3

Public Disclosure.  The Company has filed with the SEC a registration statement on Form S-3 (the “Form S-3”), which is currently being reviewed by the SEC.  In connection with the review of the Form S-3, the SEC is also reviewing the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 (the “Form 10-K”) and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 (the “Form 10-Q”).  As a result, the Company’s Form 10-K and Form 10-Q may be amended subsequent to the date hereof in response to comments received from the SEC.  Notwithstanding the foregoing, as of their respective filing dates, none of the Company’s filings with the SEC (the “Public Filings”) contained any untrue statement of a material fact or omitted any mat erial fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent such filings have been prior to the date hereof corrected, updated or superseded by a document subsequently filed with the SEC.

SECTION 6.  REPRESENTATIONS OF THE PURCHASER.

Each Purchaser hereby represents and warrants to, and agrees with, the Company as follows:

6.1

It is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

6.2

If a natural person, the Purchaser is: a bona fide resident of the state contained in the address set forth on Schedule A as the Purchaser’s home address; at least 21 years of age; and legally competent to execute this Agreement.  If an entity, the Purchaser is duly authorized to execute this Agreement and this Agreement constitutes the legal, valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms.

6.3

The Purchaser is familiar with the Company’s business, plans and financial condition, the terms of the offering of the Units (the “Offering”), and any other matters relating to the Offering; the Purchaser has received all materials that have been requested by the Purchaser; the Purchaser has had a reasonable opportunity to ask questions of the Company and its representatives; and the Company has answered all inquiries that the Purchaser or the Purchaser’s representatives have put to it.  The Purchaser has had access to all additional non-confidential information necessary to verify the accuracy of the information set forth in this Agreement and any other materials furnished herewith, and has taken all the steps necessary to evaluate the merits and risks of an investment as proposed hereunder.  Without limiti ng the foregoing, the Purchaser acknowledges that it has reviewed certain information regarding the Company, its business and the terms of this Offering, including but limited to, the information contained in the Offering Document dated July 22, 2003 (the “Offering Document”).  The Purchaser acknowledges it has been advised by the Company that the SEC is reviewing the Company’s Public Filings, including the Form 10-K, and as a result the Company’s Public Filings may be amended.

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6.4

The Purchaser has such knowledge and experience in finance, securities, investments and other business matters so as to be able to protect the interests of the Purchaser in connection with this transaction, and the Purchaser’s investment in the Company hereunder is not material when compared to the Purchaser’s total financial capacity.

6.5

The Purchaser understands the various risks of an investment in the Company as proposed herein, including without limitation those set forth in the Offering Document and in the Public Filings, and can afford to bear such risks, including, without limitation, the risks of losing the entire investment.

6.6

The Purchaser acknowledges that no market for the Units currently exists and none may develop in the future and that the Purchaser may find it impossible to liquidate the investment at a time when it may be desirable to do so, or at any other time.

6.7

The Purchaser has been advised by the Company that the Units have not been registered under the Securities Act, that the Securities will be issued on the basis of the statutory exemption provided by Section 4(2) of the Securities Act or Regulation D promulgated thereunder, or both, relating to transactions by an issuer not involving any public offering and under exemptions under certain state securities laws, that this transaction has not been reviewed by, passed on or submitted to any federal or state agency or self-regulatory organization where an exemption is being relied upon, and that the Company’s reliance thereon is based in part upon the representations made by the Purchaser in this Agreement.  The Purchaser acknowledges that the Purchaser has been informed by the Company of, or is otherwise familiar with, the nature of the limitations imposed by the Securities Act and the rules and regulations thereunder on the transfer of the Units.  In particular, the Purchaser agrees that the Company shall not be required to give any effect to sale, assignment or transfer, unless (i) the sale, assignment or transfer of such Units is registered under the Securities Act, it being understood that the Units are not currently registered for sale and that the Company has no obligation or intention to so register the Securities except as set forth herein, or (ii) such Units are sold, assigned or transferred in accordance with all the requirements and limitations of Rule 144 under the Securities Act, or (iii) such sale, assignment or transfer is otherwise exempt from registration under the Securities Act.  The Purchaser further understands that an opinion of counsel and other documents may be required to transfer the Units.  The Purchaser acknowledges that the Units shall be subject to stop transfer orders and the certificate or certificates evidencing any Units shall bear the following or a substantially similar legend or such other legend as may appear on the forms of Units and such other legends as may be required by state blue sky laws:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE OR FOREIGN SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE OR FOREIGN SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL

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AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR APPLICABLE STATE OR FOREIGN SECURITIES LAWS.”

6.8

The Purchaser will acquire the Units for the Purchaser’s own account (or for the joint account of the Purchaser and the Purchaser’s spouse either in joint tenancy, tenancy by the entirety or tenancy in common) for investment and not with a view to the sale or distribution thereof or the granting of any participation therein, and has no present intention of distributing or selling to others any of such interest or granting any participation therein.

6.9

Neither the Company nor any of the officers, directors, shareholders, partners, employees or agents of either, or any other Persons, whether expressly or by implication, have represented, guaranteed or warranted that,

(a)

The Company or the Purchaser will realize any given percentage of profits and/or amount or type of consideration, profit or loss as a result of the Company’s activities or the Purchaser’s investment in the Company; or

(b)

the past performance or experience of the management of the Company, or of any other person, will in any way indicate the predictable results of the ownership of the Units or of the Company’s activities.

6.10

No oral or written representations have been made other than as stated in this Agreement, the Offering Document, and the Executive Summary dated June 2003 (the “Executive Summary”), and the Purchaser has not relied on any oral or written representation from the Company other than as set forth in this Agreement and the Offering Document in making its investment decision.  The Purchaser hereby acknowledges that the information and representations set forth in this Agreement and the Offering Document supersede all prior information and representations provided to the Purchaser in connection with the Offering, including without limitation those set forth in the Executive Summary.

6.11

The Purchaser is not purchasing for the Units as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or meeting.

6.12

The Purchaser is not relying on the Company with respect to the tax and other economic considerations of an investment.

6.13

The Purchaser understands that the net proceeds from the Offering (after deduction for expenses of the Offering) will be used in all material respects for the purposes set forth in the Offering Document.

6.14

The Purchaser acknowledges that the representations, warranties and agreements made by the Purchaser herein shall survive the execution and delivery of this Agreement and the purchase of the Units.

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6.15

Blue Sky matters:

THE UNITS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.  THE UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OTHER FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING.  ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

THE UNITS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. SUBSCRIBERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

6.16

The Purchaser agrees to use its reasonable best efforts to make all warranties and representations required by the securities laws of Purchaser’s jurisdiction of domicile necessary to enable the Company to issue the Transaction Shares in compliance with such securities laws.

6.17

The Purchaser acknowledges that as a result of its investment hereunder it may become subject to the reporting requirements of Sections 13 and 16 of the Exchange Act.  In the event that Purchaser becomes subject to the reporting requirements of Sections 13 and 16, Purchaser agrees to file a Schedule 13-D and a Form 3 no later than 10 days from the Closing and to keep current such filings in accordance with the requirements of Sections 13 and 16.

6.18

The Purchaser has consulted his own financial, legal and tax advisors with respect to the economic, legal and tax consequences of an investment in the Units and has not relied on the Company, its officers, directors or professional advisors for advice as to such consequences.

SECTION 7.  PAYMENT OF THE NOTES.

7.1

Required Payments.  The principal amount of the Notes shall be due and payable in equal quarterly installments commencing on October 31, 2003 with the last installment due on July 31, 2006 (the “Maturity Date”).  Each principal payment shall be paid in United States dollars or, to the extent legally permitted, in shares of Common Stock (the “Principal Shares”), at the Company’s option; provided, however, that the Company may only elect to make principal payments in Principal Shares if at the time of the payment an effective registration statement covering the issuance of the Principal Shares shall be available to the Company; and provided further, that the Company shall make principal payments in Principal Shares only to the extent provided in Section 12 hereof.  If such principal payment is paid in Principal Shares, then the number of Principal Shares to be issued on account of the principal payment shall be equal to the amount of the principal payment due divided by 95% of the weighted-average volume price for the Common Stock on Nasdaq as reported by Bloomberg Financial Markets (“Bloomberg”) for the 20 consecutive trading days prior to the date of the

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principal payment.  In the event the Company elects to pay the principal amount due in Principal Shares it shall notify the Holder of its election no later than 15 days prior to the commencement of the 20 consecutive trading day period referenced above.

7.2

Change in Control.

(a)

Notice of Change in Control or Control Event.  The Company will, within 15 Business Days after any Responsible Officer has knowledge of the occurrence of any Change in Control or Control Event (subject in the case of any Control Event to contractual limitations on disclosure and disclosure limitations imposed by applicable securities laws), give written notice of such Change in Control or Control Event to each holder of Notes unless notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to this Section 7.2. If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in of this Section 7.2 and shall be accompanied by the certificate described in this Section 7.2.

(b)

Offer to Prepay Notes.  The offer to prepay Notes contemplated by this Section 7.2(b) shall be an offer to prepay, in accordance with and subject to this Section 7.2, all, but not less than all, the Notes held by each holder (in this case only, “holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Prepayment Date”).  If such Proposed Prepayment Date is in connection with an offer contemplated by this Section 7.2, such date shall be not less than 30 days and not more than 60 days after the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the 30th day after the date of such offer).

(c)

Acceptance.  A holder of Notes may accept the offer to prepay made pursuant to this Section 7.2 by causing a notice of such acceptance to be delivered to the Company at least 15 days prior to the Proposed Prepayment Date.  A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 7.2 shall be deemed to constitute a rejection of such offer by such holder.

(d)

Prepayment.  Prepayment of the Notes to be prepaid pursuant to this Section 7.2 shall be at 101% of the then-outstanding principal amount of such Notes together with interest on such Notes accrued to the date of prepayment (the “Change in Control Prepayment”).  The prepayment shall be made on the Proposed Prepayment Date except as provided in Section 7.2(e).  The Company may pay the Change in Control Prepayment in United States dollars or in shares of Common Stock (the “Prepayment Shares”), at the Company’s option; provided, however, that the Company may only elect to pay the Change in Control Prepayment in Prepayment Shares if at the time of payment an effective registration statement covering the issuance of the Prepayment Shares shall be available to the Company; and provided further, th at the Company shall pay the Change in Control Prepayment in Prepayment Shares only to the extent provided in Section 12 hereof.  If the Change in Control Prepayment is paid in Prepayment Shares, then the number of Prepayment Shares to be issued on account of the prepayment shall be equal to the amount of the Change in Control Prepayment divided by 95% of the weighted-average volume price for the Common Stock on Nasdaq as reported by Bloomberg for the 20 consecutive trading days prior to the date of the Proposed Prepayment

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Date.  In the event the Company elects to pay the Change in Control Prepayment in Prepayment Shares, it shall notify the Holder of its election no later than 15 days prior to the commencement of the 20 consecutive trading day period referenced above.

(e)

Deferral Pending Change in Control.  The obligation of the Company to prepay Notes pursuant to the offer required by this Section 7.2 is subject to the occurrence of the Change in Control in respect of which such offer and acceptance shall have been made.  In the event that such Change in Control does not occur on the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until, and shall be made on the date on which, such Change in Control occurs.  The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this Section 7.2 in respect of such Change in Control shall be deemed rescinded).

(f)

Content of Offer.  Each offer to prepay the Notes pursuant to this Section 7.2 shall, specify:

(i)

the Proposed Prepayment Date;

(ii)

that such offer is made pursuant to this Section 7.2;

(iii)

the principal amount of each Note offered to be prepaid;

(iv)

the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date;

(v)

that the conditions of this Section 7.2 have been fulfilled; and

(vi)

in reasonable detail, the nature and date or proposed date of the Change in Control.

(g)

“Change in Control” Defined.  “Change in Control” means each and every issue, sale or other disposition of shares of stock of the Company which results in any person (as such term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act) (herein, an “Acquiring Person”) becoming the “beneficial owners” (as such term is used in Rule 13d-3 under the Exchange Act as in effect on the date of the Closing), directly or indirectly, of more than 50% (by total voting power) of the issued and outstanding capital stock of the Company which is entitled to vote in the election of the members of the Company's board of directors.

(h)

“Control Event” Defined.  “Control Event” means:

13

(i)

the execution by the Company or any of its Subsidiaries or Affiliates of any agreement or letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, may reasonably be expected to result in a Change in Control, or

(ii)

the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control.

SECTION 8.  SUBORDINATION OF NOTES AND GUARANTY.

8.1

Notes Subordinate to Senior Indebtedness.  The Company covenants and agrees, and each Purchaser of a Note, by its acceptance thereof, likewise covenants and agrees, for the benefit of the holders, from time to time, of Senior Indebtedness that, to the extent and in the manner hereinafter set forth in this Section, the Indebtedness represented by the Notes and the payment of the principal of (and premium, if any) and interest on each and all of the Notes are hereby expressly made subordinate and subject in right of payment as provided in this Section to the prior payment in full in cash or cash equivalents or in any other form acceptable to each holder of Senior Indebtedness, of all Senior Indebtedness; provided, however, that the Notes, the Indebtedness represented thereby and the payment of the principal of (an d premium, if any) and interest on the Notes in all respects shall rank equally with, or prior to, all existing and future senior subordinated indebtedness (including, without limitation, Indebtedness) of the Company that is subordinated to Senior Indebtedness.

8.2

Subordination of Guaranty.  The Guaranty issued by any Guarantor will be unsecured senior subordinated obligations of such Guarantor, ranking pari passu with all other existing and future senior subordinated indebtedness of such Guarantor, if any.  The Indebtedness evidenced by such Subsidiary Guarantee will be subordinated on the same basis as the guaranty of any Senior Indebtedness of such Guarantor as the Notes are subordinated to Senior Indebtedness.

SECTION 9.  PAYMENT OF INTEREST.

9.1

The principal amount of the Notes outstanding shall bear interest at the rate of 6% per annum beginning on the date of issuance.  Interest shall be payable quarterly beginning on October 31, 2003.  Each interest payment shall be paid in United States dollars or, to the extent legally permitted, in shares of Common Stock (the “Interest Shares”), at the Company’s option; provided, however, that the Company may only elect to make interest payments in Interest Shares if at the time of payment an effective registration statement covering the issuance of the Interest Shares shall be available to the Company; and provided further, that the Company shall make interest payments in Interest Shares only to the extent provided in Section 12 hereof.  If such interest payment is paid in Interest Shares, then the number of Interest Shares to be issued on account of the interest payment shall be equal to the amount of the interest payment due divided by 95% of the weighted-average volume price for the Common Stock on Nasdaq as reported by Bloomberg for the 20 consecutive trading days prior to the date of the interest payment.  In the event the Company elects to pay the interest amount due in Interest Shares it shall notify the Holder of its election no later than 15 days prior to the commencement of the 20 consecutive trading day period referenced above.

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SECTION 10.  NEGATIVE COVENANTS.

The Company covenants that so long as any of the Notes are outstanding:

10.1

Limitation on Liens.  The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise), any Lien on or with respect to any property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Company or any such Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom, or assign or otherwise convey any right to receive income or profits except:

(a)

Liens for taxes, assessments or other governmental charges which are not yet due and payable;

(b)

Liens incidental to the conduct of business or the ownership of properties and assets (including landlords', carriers', warehousemen's, mechanics', materialmen's and other similar Liens) and Liens to secure the performance of bids, tenders, leases, or trade contracts, or to secure statutory obligations (including obligations under workers compensation, unemployment insurance and other social security legislation), surety or appeal bonds or other Liens incurred in the ordinary course of business and not in connection with the borrowing of money;

(c)

leases or subleases entered into by the Company or its Subsidiaries as either lessors or sublessors, easements, rights-of-way, restrictions and other similar charges or encumbrances (including zoning restrictions), in each case incidental to the ownership of property or assets or the ordinary conduct of the business of the Company or any of its Subsidiaries, provided that such Liens do not, in the aggregate, detract from the value of such property in any material way;

(d)

Liens incidental to minor survey exceptions and similar Liens, provided that such Liens do not, in the aggregate, materially detract from the value of such property;

(e)

Liens on property or assets of Subsidiaries securing Indebtedness owing to the Company or to another Subsidiary;

(f)

Liens existing on the date of Closing which secure outstanding Indebtedness of the Company and its Subsidiaries;

(g)

any Lien existing on property of a Person immediately prior to its being consolidated with or merged into the Company or a Subsidiary or its becoming a Subsidiary, or any Lien existing on any property acquired by the Company or any Subsidiary at the time such property is so acquired (whether or not the Indebtedness secured thereby shall have been assumed; and

(h)

any extensions, renewals or replacements of any Lien permitted by the preceding subparagraphs of this Section 10.1, provided that (i) no additional property shall be encumbered by such Liens, (ii) the unpaid principal amount of the Indebtedness secured thereby

15

shall not be increased prior to or on or after the date of any extension, renewal or replacement, (iii) the weighted average life to maturity of the Indebtedness secured by such Liens shall not be reduced, and (iv) at such time and immediately after giving effect thereto, no Default or Event of Default would exist.

10.2

Merger, Consolidation.  The Company will not, and will not permit any Subsidiary to, consolidate with or be a party to a merger with any other Person; provided, however, that:

(a)

any Subsidiary may merge or consolidate with or into the Company, so long as in any merger or consolidation involving the Company, the Company shall be the surviving entity;

(b)

any Subsidiary may merge or consolidate with or into any other Person if either (x) the Subsidiary shall be the surviving entity, or (y) if the Subsidiary is not the surviving entity, such transaction is permitted by Section 10.3; and

(c)

the Company may consolidate or merge with any other Person if (i) either (x) the Company shall be the surviving entity, or (y) if the surviving entity is other than the Company, such entity expressly assumes, by written agreement satisfactory in scope and form to the Required Holders, all obligations of the Company under the Notes, the Warrants and this Agreement, and (ii) at the time of such consolidation or merger and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing.

10.3

Sales of Assets.  The Company will not, and will not permit any Subsidiary to, sell, lease or otherwise dispose of substantially all of the assets of the Company and its Subsidiaries unless the consideration received by the Company or such Subsidiary for such sale is not less than the Fair Market Value of the assets sold (as determined by the Board of Directors of the Company, whose determination shall be conclusive and evidenced by a Board Resolution).

10.4

Transactions with Affiliates.  The Company will not, and will not permit any Subsidiary to enter into, directly or indirectly, any Material transaction or Material group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or another Subsidiary), except upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate.

10.5

Limitation on Indebtedness.  The Company will not, and will not permit any Subsidiary to, create, issue, assume, guarantee or in any manner become directly or indirectly liable for the payment of, or otherwise incur (collectively, “incur”), any Indebtedness (including any Acquired Indebtedness), other than Permitted Indebtedness.

10.6

Limitation on Restricted Payments.

(a)

The Company will not, and will not permit any Subsidiary to, directly or indirectly:

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(i)

declare or pay any dividend on, or make any distribution to holders of, any shares of the Common Stock of the Company or any Subsidiary (other than the declaration or payment of dividends or distributions to the extent declared or paid to the Company or any Subsidiary or in accordance with the Company’s current dividend payment policy);

(ii)

purchase, redeem or otherwise acquire or retire for value, directly or indirectly, any shares of Common Stock of the Company or any Affiliate of the Company (other than Common Stock of any Subsidiary) or any options, warrants or other rights to acquire such shares of Common Stock; or

(iii)

make any principal payment on, or repurchase, redeem, defease or otherwise acquire or retire for value, prior to any scheduled principal payment, sinking fund payment or maturity, any Subordinated Indebtedness of the Company or any Subsidiary.

10.7

Limitation on Sale and Leaseback Transactions.  The Company shall not, and shall not permit any Subsidiary to, directly or indirectly, enter into any Sale and Leaseback Transaction with respect to any property or assets (whether now owned or hereafter acquired), unless (i) the sale or transfer of such property or assets to be leased is treated as a sale of assets and the Company complies with Section 10.3, and (ii) the Company or such Subsidiary would be permitted to incur Indebtedness under Section 10.5 in the amount of the Capitalized Lease Obligations incurred in respect of such Sale and Leaseback Transaction.

SECTION 11.  EVENTS OF DEFAULT.

An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

(a)

the Company defaults in the payment of any principal on any Note for more than 10 Business Days after the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or

(b)

the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable, whether at a date fixed for payment or by declaration or otherwise; or

(c)

the Company defaults in the performance of or compliance with any Material terms contained herein and such default is not remedied within 30 days after receipt of written notice from the Required Holders of such default; or

(d)

any representation or warranty made in writing by or on behalf of the Company or any Guarantor or by any officer of the Company or any Guarantor in this Agreement, any or in any writing furnished in connection with the transactions contemplated hereby or thereby proves to have been false or incorrect in any Material respect on the date as of which made; or

(e)

the Company defaults in the payment of any principal or interest on any Indebtedness of the Company, in any case in an amount in excess of $1,000,000, which default

17

continues for more than the applicable cure period, if any, and/or is not waived in writing by the other party thereto;

(f)

the Company or any Guarantor (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or

(g)

a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company or any of the Guarantors, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any of the Guarantors, or any such petition shall be filed against the Company or any of the Guarantors and such petition shall not be dismissed within 60 days.

SECTION 12.  LIMITATION ON ISSUANCE OF COMMON STOCK.

Notwithstanding anything to the contrary contained herein or in the Offering Document, the Company shall not:

(a)

(i) Issue any of the Transaction Shares, or (ii) adjust the number of Warrant Shares in accordance with the terms of the Warrants, if such issuance or adjustment would, either individually or together with other one or more other issuances or adjustments, cause the issuance of shares of Common Stock to exceed the number of shares that the Company could then issue in compliance with Section 4350(i) of the rules and regulations of Nasdaq (the “Nasdaq Rules”) or any successor rule or regulation.  Under Section 4350(i) of the Nasdaq Rules, a company may not issue shares, and may not issue securities convertible into shares, where the shares issued could in the aggregate equal 20% or more of the voting power of the shares outstanding, without obtaining shareholder approval.  The foregoing limitation shall only apply until such time as the Company obtains the requisite approval of its shareholders for the issuance of the Transaction Shares, as required by Section 4350(i) of the Nasdaq Rules or any successor rule or regulation.  The Company covenants and agrees that it shall include a proposal for the approval of the issuance of the Transaction Shares in the Company’s proxy statement for its 2004 annual meeting of shareholders, which the Company currently anticipates shall take place in June 2004.  If, due to the foregoing limitation,  the Company cannot adjust the Warrant Shares as provided  in  Section 8.3 of the Warrant, then, subject to NASD approval, the Company agrees that the exercise price thereof shall be reduced to equal the Issuance Price(s) of the shares of Common Stock that triggered the adjustment pursuant to Section 8.3 of the Warrant.

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(b)

Issue any of the Transaction Shares, if such issuance would violate the securities laws of the jurisdiction in which any Purchaser receiving such shares is located.  

SECTION 13.  REMEDIES ON DEFAULT, ETC.

13.1

Acceleration.

(a)

If an Event of Default with respect to the Company described in Section 11 has occurred, all the Notes then outstanding may at any time thereafter at the Holder’s option, by notice or notices to the Company, be declared immediately due and payable.

Upon any Note becoming due and payable under this Section 13.1, such Note will forthwith mature and the entire unpaid principal amount of such Note, plus (i) all accrued and unpaid interest thereon shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived.

13.2

Other Remedies.  If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 13.1, the Required Holders at the time outstanding may proceed to protect and enforce the rights of the holders by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.

13.3

Rescission.  At any time after any Notes have been declared due and payable pursuant to Section 13.1, the holders of not less than 50% in principal amount of the Notes, taken individually, then outstanding, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes and, all principal if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 18, and (c) no judgment or  decree has been entered for the payment of any monies due pursuant hereto or to any Notes.  No rescission and annulment u nder this Section 13.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.

13.4

No Waivers or Election of Remedies, Expenses, Etc.  No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder's rights, powers or remedies.  No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise.  The Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including, without limitation, the reasonable attorneys' fees, expenses and disbursements for th e holders.

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SECTION 14.  REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

14.1

Registration of Notes.  The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes.  The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register.  Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary.

14.2

Transfer and Exchange of Notes.  Upon surrender of any Note at the principal executive office of the Company for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or its attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Company shall execute and deliver not more than five Business Days following surrender of such Note, at the Company's expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note.  Each such new Note shall be paya ble to such Person as such holder may request and shall be substantially in the form of the Note originally issued hereunder.  Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon.  The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes.  Notes shall not be transferred in denominations of less than $100,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $100,000.  Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Section 6.

14.3

Replacement of Notes.  Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note, and

(a)

in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $50,000,000, such Person's own unsecured agreement of indemnity shall be deemed to be satisfactory), or

(b)

in the case of mutilation, upon surrender and cancellation thereof, the Company at its own expense shall execute and deliver not more than five Business Days following satisfaction of such conditions, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.

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SECTION 15.  PAYMENTS ON NOTES.

The Company will pay all sums becoming due on the Notes for principal, and interest by the method and at the address specified for such purpose for such Purchaser on Schedule A hereto or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 19.  Prior to any sale or other disposition of any Note held by any Purchaser, such Person will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 14.2.

SECTION 16.  REGISTRATION RIGHTS.

The Purchasers have entered into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which the Company has agreed to grant Purchasers certain registration rights with respect to the resale of the Transaction Shares and the Warrants.

SECTION 17.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE

 AGREEMENT.

All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the related Units, the purchase or transfer by any Purchaser of any such Units or portion thereof or interest therein and may be relied upon by any subsequent holder of any such Units, regardless of any investigation made at any time by or on behalf of any Purchaser or any other holder of any such Units.  This Agreement, the Subsidiary Guarantee, the Notes, the Warrants, and the Registration Rights Agreement embody the entire agreement and understanding between the Purchasers and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.

SECTION 18.  AMENDMENT AND WAIVER.

18.1

Requirements.

(a)

This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company and the holders of Notes holding more than 50% in aggregate principal amount of the Notes at the time outstanding, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, or 6 hereof or the corresponding provision of any Supplement, or any defined term (as it is used in any such Section or such corresponding provision of any Supplement), will be effective as to any holder of Notes unless consented to by such holder of Notes in writing, and (b) no such amendment or waiver may, without the written consent of all of the holders of Notes at the time outstanding affected thereby, (i) subject to the provisions of Section 10 relating to acceleration or rescission, change

21

the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest on the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of Sections 7, 10, 11.1, 14 or 16.

18.2

Solicitation of Holders of Notes.

(a)

Solicitation.  The Company will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof, or of the Notes.  The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 18 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.

(b)

Payment.  The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment.

18.3

Binding Effect, Etc.  Any amendment or waiver consented to as provided in this Section 18 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver.  No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon.  No course of dealing between the Company and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note.  As used herein, the term “this Agreement” and references thereto shall mean this Agre ement as it may from time to time be amended or supplemented.

18.4

Notes Held by Company, Etc.  Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.

SECTION 19. NOTICES.

All notices and communications provided for hereunder shall be in writing and sent (a) by telefacsimile if the sender on the same day sends a confirming copy of such notice by a

22

recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid).  Any such notice must be sent:

(i)

if to a Purchaser, to such Purchaser at the address specified for such communications in Schedule A to this Agreement, or at such other address as such Purchaser shall have specified to the Company in writing pursuant to this Section 19, or

(ii)

if to the Company, to the Company at its address set forth at the beginning hereof to the attention of Chief Financial Officer, with a copy to the General Counsel, or at such other address as the Company shall have specified to the holder of each Note in writing.

Notices under this Section 19 will be deemed given only when actually received.

SECTION 20.  CONFIDENTIAL INFORMATION.

For the purposes of this Section 20, “Confidential Information” means information delivered to any Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of the Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any Person acting on such Purchaser's behalf, or (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or any Subsidiary.  Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser, provided that such Purchaser may deliver or disclose Confidential Information to (w)(i) such Purchaser's directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by such Purchaser's Notes), (ii) such Purchaser's financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, or (iii) any other holder of any Note (x) to effect compliance with any law, Rule, regulation or order applicable to such Purchaser, (y) in response to any subpoena or other legal process, provided that, to the extent permitted by law, each holder will use r easonable efforts to notify the Company of any request to disclose Confidential Information requested pursuant to any subpoena or other legal process, provided further that the failure to notify the Company of any such request shall not result in any liability to such holder, or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser's Notes and this Agreement.  Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement.  On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such

23

holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 20.

SECTION 21.  MISCELLANEOUS.

21.1

Successors and Assigns.  All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not.

21.2

Payments Due on Non-Business Days.  Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day.

21.3

Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

21.4

Construction.  Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant.  Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

21.5

Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument.  Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

21.6

Governing Law.  This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Florida excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

21.7

Legal Rate of Interest.  Regardless of any provision contained in this Agreement or in any Guaranty, the rate of interest borne by the Notes shall not exceed the maximum amount of nonusurious interest that may be contracted for, taken, reserved, charged or received under any applicable law; any interest in excess of that maximum amount shall be credited on the principal of the Notes or, if that has been paid, refunded.  On any acceleration or required or permitted prepayment, any such excess shall be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the Notes or, if the principal of the Notes has been paid, refunded.  In determining whether or not the interest paid or payable, under any specific contingency, exceeds the maximum amount of nonusurious interes t,

24

the Company and holders of the Notes shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) spread the total amount of interest throughout the entire contemplated term of the Notes.

21.8

Submission to Process.  THE COMPANY AND THE PURCHASERS HEREBY AGREE THAT ANY LEGAL ACTION OR PROCEEDING AGAINST THE COMPANY WITH RESPECT TO THIS AGREEMENT, OR THE NOTES SHALL BE BROUGHT IN THE COURTS OF THE STATE OF FLORIDA OR (TO THE EXTENT THEY HAVE SUBJECT MATTER JURISDICTION) OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF FLORIDA AS THE HOLDERS OF 51% IN PRINCIPAL AMOUNT OF THE NOTES MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, THE COMPANY ACCEPTS AND CONSENTS, FOR ITSELF AND IN RESPECT TO ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, TO THE JURISDICTION OF THE AFORESAID COURTS AND AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY THE COMPANY AND THE HOLDERS OF 51% IN PRINCIPAL AMOUNT OF THE NOTES IN WRITING.  THE COMPANY WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS.

21.9

Waivers.  THE COMPANY WAIVES (A) THE RIGHT TO TRIAL BY JURY (WHICH EACH HOLDER OF NOTES HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY SECURITY DOCUMENT OR THE NOTES; (B) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, INTENT TO ACCELERATE, ACCELERATION, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL DOCUMENTS, INSTRUMENTS, AND GUARANTIES AT ANY TIME HELD BY THE HOLDERS OF NOTES (OR ANY AGENT THEREFOR) ON WHICH THE COMPANY MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER THE HOLDERS OF NOTES MAY DO IN THIS REGARD; AND (C) NOTICE OF ACCEPTANCE HEREOF.  THE COMPANY ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO THE HOLDERS' ENTERIN G INTO THIS AGREEMENT AND THAT THE HOLDERS ARE RELYING UPON THE FOREGOING WAIVERS IN THEIR FUTURE DEALINGS WITH THE COMPANY.  THE COMPANY WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS WRITTEN CONSENT TO A TRIAL BY THE COURT.

21.10

Exculpation.  Each party to this Agreement acknowledges that Brown Raysman Millstein Felder & Steiner LLP represented J. Giordano Securities, LLC in the transactions contemplated by this Agreement and has not represented either the Company or any Purchaser in connection with such transaction.

25

The execution hereof by the Purchasers shall constitute a contract among the Company and the Purchasers for the uses and purposes hereinabove set forth.  

Very truly yours,

21^st CENTURY HOLDING COMPANY

By                                               

Richard A. Widdicombe,

Chief Executive Officer

26

Accepted as of the first date written above.

PURCHASER:

By

Name:

Title:

27

EXHIBIT A

FORM OF NOTE

A

21^ST CENTURY HOLDING COMPANY

6% SENIOR SUBORDINATED NOTE DUE ______________, 2006

No.  [______]

[Date]

$[__________]

FOR VALUE RECEIVED, the undersigned, 21^ST CENTURY HOLDING COMPANY (herein called the “Company”), a corporation organized and existing under the laws of the State of Florida , hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] DOLLARS with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6% per annum from the date hereof, payable quarterly beginning on ________________, 2003.

This Note is one of a series of Senior Subordinated Notes (herein called the “Notes”) issued pursuant to the Unit Purchase Agreement, dated as of ________________, 2003 (as from time to time amended, supplemented or modified, the “Unit Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof.  Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Unit Purchase Agreement and (ii) to have made the representations set forth in Section 6 of the Unit Purchase Agreement.

Payments of principal of and interest on this Note are to be made, at the Company’s option, in lawful money of the United States of America or, in whole or in part, by the issuance to the holder hereof of Interest Shares, as defined in and in accordance with the Unit Purchase Agreement.

This Note is a registered Note and, as provided in the Unit Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee.  Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

The Company will make required prepayments of principal on the dates and in the amounts specified in the Unit Purchase Agreement.  This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Unit Purchase Agreement, but not otherwise.

If an Event of Default, as defined in the Unit Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price and with the effect provided in the Unit Purchase Agreement.

A-1

Pursuant to the Subsidiary Guarantee dated as of _____________, 2003 (the “Subsidiary Guarantee”), certain subsidiaries of the Company have absolutely and unconditionally guaranteed payment in full of the principal of, and interest on this Note and the performance by the Company of all of its obligations contained in the Unit Purchase Agreement all as more fully set forth in said Subsidiary Guarantee.

This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder hereof shall be governed by, the law of the State of Florida, excluding the choice-of-law principles of such state that would require the application of the laws of a jurisdiction other than such state.

21^ST CENTURY HOLDING COMPANY

By:

Name:

Title:

A-2

EXHIBIT B

FORM OF WARRANT

B

EXHIBIT C

FORM OF SUBSIDIARY GUARANTEE

C

SCHEDULE A

PURCHASERS

EX-5.1

BROAD AND CASSEL

ATTORNEYS AT LAW

201 SOUTH BISCAYNE BOULEVARD

SUITE 3000

MIAMI, FLORIDA 33131

TELEPHONE: 305-373-9400

FACSIMILE: 305-373-9443

www.broadandcassel.com

September 30, 2003

21^st Century Holding Company

4161 N.W. 5^th Street

Plantation, Florida 33317

Re:

21^st Century Holding Company (the “Company”)

Registration Statement on Form S-3

Ladies and Gentlemen:

We have acted as counsel for the Company with respect to the preparation and filing with the U.S. Securities and Exchange Commission of a Registration Statement on Form S-3 (the “Form S-3”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”). You have requested our opinion with respect to the 1,040,000 redeemable warrants (the “Warrants”) and 520,000 shares of the Company’s common stock, par value $.01 per share (the “Common Stock”), issuable upon exercise of the Warrants (the “Shares”) that may be offered for resale by certain selling security holders under the Form S-3.

As counsel to the Company, we have examined the original or certified copies of such records of the Company, and such agreements, certificates of public officials, certificates of officers and representatives of the Company and others, and such other documents as we may deem relevant and necessary for the opinion expressed in this opinion letter. In such examination, we have assumed the genuineness of all signatures on original documents, and the conformity to original documents of all copies submitted to us as conformed or photostatic copies. As to various questions of fact material to such opinion, we have relied upon statements or certificates of officials and representatives of the Company and others.

Based on, and subject to the foregoing, we are of the opinion that the Warrants have been and, when issued upon exercise of the Warrants in accordance with the terms of the Warrants, the Shares will be, duly issued, fully paid and nonassessable.

21^st Century Holding Company

September 30, 2003

Page 2

The opinion expressed herein is based on Florida law, including the statutes and constitution of the State of Florida as in existence on the date hereof and the reported judicial decisions interpreting such statutes and constitution.

In rendering this opinion, we advise you that members of this Firm are members of the Bar of the State of Florida, and we express no opinion herein concerning the applicability or effect of any laws of any other jurisdiction, except the securities laws of the United States of America referred to herein.

We hereby consent to the filing of this opinion letter as an exhibit to the Form S-3. We also consent to the use of our name under the caption “Legal Matters” in the prospectus constituting part of the Form S-3. In giving such consent, we do not thereby admit that we are included within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations promulgated thereunder.

Very truly yours,

/s/ BROAD AND CASSEL

BROAD AND CASSEL

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

As independent certified public accountants, we hereby consent to the incorporation by reference in this Form S-3 registration statement covering the registration of 520,000 shares of common stock and 1,040,000 redeemable warrants to purchase one-half share of common stock, of our report dated March 29, 2002 included in 21st Century Holding Company’s Form 10-K for the year ended December 31, 2002, as amended, and to all references to our Firm included in this registration statement.

McKEAN, PAUL, CHRYCY, FLETCHER & CO.

Miami, Florida,

September 30, 2003.

EX-23.3

EXHIBIT 23.3

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the use of our report dated March 30, 2003 included in this Form S-3, Registration Statement under the Securities Act of 1933 of 21st Century Holding Company covering the registration of up to 520,000 shares of common stock and 1,040,000 redeemable warrants and to all references to our Firm included in the registration statement.

De MEO, YOUNG, MCGRATH

Boca Raton, Florida

September 30, 2003