Edgar Filing: 21ST CENTURY HOLDING CO

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

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21st CENTURY HOLDING COMPANY
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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21st CENTURY HOLDING COMPANY

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 21, 2004

To the Shareholders of 21st Century Holding Company:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of 21st Century Holding Company, a Florida corporation (the
"Company"), will be held at our principal executive offices at 3661 West Oakland
Park Boulevard, Suite 207, Lauderdale Lakes, Florida 33311, at 11:00 A.M., on
June 21, 2005 for the following purposes:

1. To elect two directors to serve until 2008;
2. To authorize the possible issuance of 20% or more of our common
stock, $.01 par value (the "Common Stock"), in connection with our
2004 private placement of senior subordinated notes and warrants to
purchase shares of Common Stock;
3. To authorize the issuance of 3,500 shares of our Common Stock to our
Chief Executive Officer;
4. To ratify the selection of the firm of DeMeo Young McGrath as the
Company's independent auditors for the fiscal year ended December
31, 2004; and
5. To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.

The Board of Directors has fixed the close of business on April 15, 2005
as the record date for determining those shareholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.

Whether or not you expect to be present, please sign, date and return the
enclosed proxy card in the pre-addressed envelope provided for that purpose as
promptly as possible. No postage is required if mailed in the United States.

By Order of the Board of Directors,

Rebecca L. Campillo, Secretary

Lauderdale Lakes, Florida
May XX, 2005

ALL SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. THOSE
SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY URGED TO EXECUTE AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY MAY NEVERTHELESS ATTEND THE ANNUAL MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.

21st CENTURY HOLDING COMPANY

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 21, 2005

---------------------
PROXY STATEMENT
---------------------

TIME, DATE AND PLACE OF ANNUAL MEETING

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of 21st Century Holding Company, a Florida corporation
(the "Company"), of proxies from the holders of our common stock, par value $.01
per share (the "Common Stock"), for use at the Annual Meeting of Shareholders to
be held at 11:00 A.M., on June 21, 2005, at our principal executive offices at
3661 West Oakland Park Boulevard, Suite 207, Lauderdale Lakes, FL 33311, and at
any adjournments or postponements thereof (the "Annual Meeting"), pursuant to
the enclosed Notice of Annual Meeting.

The approximate date this Proxy Statement and the enclosed form of proxy
are first being sent to shareholders is May XX, 2005. Shareholders should review
the information provided herein in conjunction with our Annual Report to
Shareholders that accompanies this Proxy Statement. Our principal executive
offices are located at 3661 West Oakland Park Boulevard, Suite 300, Lauderdale
Lakes, FL 33311, and our telephone number is (954) 581-9993.

INFORMATION CONCERNING PROXY

The enclosed proxy is solicited on behalf of our Board of Directors. The
giving of a proxy does not preclude the right to vote in person should any
shareholder giving the proxy so desire. Shareholders have an unconditional right
to revoke their proxy at any time prior to the exercise thereof, either in
person at the Annual Meeting or by filing with our Secretary at our principal
executive offices indicated above a written revocation or duly executed proxy
bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by us at or prior to the Annual
Meeting.

The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting and the enclosed proxy is to be borne by us. In
addition to the use of mail, our employees may solicit proxies personally and by
telephone. Our employees will receive no compensation for soliciting proxies
other than their regular salaries. We may request banks, brokers and other
custodians, nominees and fiduciaries to forward copies of the proxy material to
their principals and to request authority for the execution of proxies. We may
reimburse such persons for their expenses in so doing.

PURPOSES OF THE ANNUAL MEETING

At the Annual Meeting, our shareholders will consider and vote upon the
following matters:

1. To elect two directors to serve until 2008;
2. To authorize the possible issuance of 20% or more of our Common
Stock in connection with our 2004 private placement of senior
subordinated notes and warrants to purchase shares of our Common
Stock;
3. To authorize the issuance of 3,500 shares of our Common Stock to our
Chief Executive Officer;
4. To ratify the selection of the firm of DeMeo Young McGrath as the
Company's independent auditors for the calendar year ended December
31, 2004; and
5. To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.

Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth herein)
will be voted (a) for the election of the respective nominees for director named
below and (b) in favor of all other proposals described in the Notice of Annual
Meeting. In the event a shareholder specifies a different choice by means of the
enclosed proxy, the shareholder's shares will be voted in accordance with the
specification so made.

OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS

The Board of Directors has set the close of business on April 15, 2005 as
the record date (the "Record Date") for determining shareholders entitled to
notice of and to vote at the Annual Meeting. As of the Record Date, there were
X,XXX,XXX shares of Common Stock issued and outstanding, all of which are
entitled to be voted at the Annual Meeting. Each share of Common Stock is
entitled to one vote on each matter submitted to shareholders for approval at
the Annual Meeting.

The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. Proposals Two, Three and Four will each require the
affirmative vote of a majority of the total votes cast on each proposal in
person or by proxy at the Annual Meeting. If less than a majority of the
outstanding shares entitled to vote are represented at the Annual Meeting, a
majority of the shares so represented may adjourn the Annual Meeting to another
date, time or place, and notice need not be given of the new date, time or place
if the new date, time or place is announced at the meeting before an adjournment
is taken.

Prior to the Annual Meeting, we will select one or more inspectors of
election for the meeting. Such inspector(s) shall determine the number of shares
of Common Stock represented at the meeting, the existence of a quorum and the
validity and effect of proxies, and shall receive, count and tabulate ballots
and votes and determine the results thereof. Abstentions will be considered as
shares present and entitled to vote at the Annual Meeting and will be counted as
votes cast at the Annual Meeting, but will not be counted as votes cast for or
against any given matter.

A broker or nominee holding shares registered in its name, or in the name
of its nominee, which are beneficially owned by another person and for which it
has not received instructions as to voting from the beneficial owner, may have
discretion to vote the beneficial owner's shares with respect to the election of
directors and certain other matters addressed at the Annual Meeting. Any such
shares that are not represented at the Annual Meeting either in person or by
proxy will not be considered to have cast votes on any matters addressed at the
Annual Meeting.

BENEFICIAL SECURITY OWNERSHIP

The following table sets forth, as of the Record Date, information with
respect to the beneficial ownership of our Common Stock by (i) each person who
is known by us to beneficially own 5% or more of our outstanding Common Stock,
(ii) each of our executive officers named in the Summary Compensation Table in
the section "Executive Compenstation," (iii) each of our directors, and (iv) all
directors and executive officers as a group.

Number of Shares Percent of
Beneficially Class
Name and Address of Beneficial Owner (1) Owned (2) Outstanding
---------------------------------------- --------- -----------

Edward J. Lawson (3)...................... 1,613,098 XX.X%
Bruce F. Simberg (4)...................... 165,750 X.X
Richard A. Widdicombe (5)................. 141,833 X.X
Kent M. Linder (6)........................ 125,150 X.X
Carl Dorf (7)............................. 89,648 X.X
Richard W. Wilcox, Jr. (8)................ 48,250 *
J. Gordon Jennings, III (9)............... 21,500 *
Charles B. Hart, Jr. (10)................. 15,000 *
Peter J. Prygelski (11) .................. 3,900 *

All directors and executive officers as a
group (9 persons) (12) 2,230,597 XX.X%

5% or greater holders:
Michele V. Lawson (13) 1,613,098 XX.X%
3661 West Oakland Park Blvd, Suite 300
Lauderdale Lakes, FL 33311

Whitebox Advisors, LLC (14) 905,922 X.X%
3033 Excelsior Blvd., Suite 300
Minneapolis, MN 55416

William D. Witter, Inc. (15) 349,800 X.X%
One Citicorp Center
153 East 53rd Street, 51st Floor
New York, NY 10022

----------------
* Less than 1%.

(1) Except as otherwise indicated, the address of each person named in the
table is c/o 21st Century Holding Company, 3661 West Oakland Park
Boulevard, Suite 300, Lauderdale Lakes, FL 33311.

(2) Except as otherwise indicated, the persons named in this table have sole
voting and investment power with respect to all shares of Common Stock
listed, which include shares of Common Stock in which such persons have
the right to acquire a beneficial interest within 60 days from the date of
this Proxy Statement.

(3) Represents 681,713 shares of Common Stock held of record by Michele V.
Lawson, 25,425 shares held in an account for a minor, 66,324 shares of
Common Stock issuable upon the exercise of stock options held by Mr.
Lawson and 20,676 shares of Common Stock issuable upon the exercise of
stock options held by Mrs. Lawson.

(4) Includes 28,500 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Simberg.

(5) Includes 3,083 shares of Common Stock held jointly with spouse and 90,000
shares of Common Stock issuable upon the exercise of stock options held by
Mr. Widdicombe.

(6) Includes 75,000 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Linder.

(7) Includes 5,764 shares of Common Stock held by Dorf Partners 2001 LP,
67,384 shares of Common Stock held by Dorf Trust, 1,500 shares of Common
Stock held in a joint account with Mr. Dorf's spouse, and 15,000 shares of
Common Stock issuable upon the exercise of stock options held by Mr. Dorf.

(8) Includes 3,000 shares of Common Stock held in Mr. Wilcox's IRA and 15,000
shares of Common Stock issuable upon the exercise of stock options held by
Mr. Wilcox.

(9) Includes 21,500 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Jennings.

(10) Includes 15,000 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Hart.

(11) Includes 300 shares of Common Stock held in Mr. Prygelski's IRA and 3,000
shares of Common Stock issuable upon the exercise of stock options held by
Mr. Prygelski.

(12) Includes 350,000 shares of Common Stock issuable upon the exercise of
stock options.

(13) Represents 818,960 shares of Common Stock held of record by Edward J.
Lawson, 25,425 shares held in an account for a minor, 20,676 shares of
Common Stock issuable upon the exercise of stock options held by Mrs.
Lawson and 66,324 shares of Common Stock issuable upon the exercise of
stock options held by Mr. Lawson.

(14) Includes 532,244 shares of Common Stock issuable upon the exercise of
Redeemable Warrants held by Whitebox Convertible Arbitrage Partners, LP;
143,142 shares of Common Stock issuable upon the exercise of Redeemable
Warrants held by Whitebox Hedged High Yield Partners, LP; 58,823 shares of
Common Stock issuable upon the exercise of Redeemable Warrants held by
Whitebox Intermarket Partners, LP; and 149,702 shares of Common Stock
issuable upon the exercise of Redeemable Warrants held by Pandora Select
Partners, LP.

(15) Includes 296,620 shares of Common Stock beneficially held on behalf of
various clients of Witter, Inc. This information is based on the
beneficial owner's filing with the Securities and Exchange Commission
under Section 13 and/or Section 16 of the Securities Exchange Act of 1934.

PROPOSAL ONE: ELECTION OF DIRECTORS

Under our Articles of Incorporation, our Board of Directors is divided
into three classes. Each class of directors serves a staggered term. Carl Dorf
and Charles B. Hart, Jr. hold office until the 2005 Annual Meeting, and each has
been nominated for reelection to the Board, to serve as class III directors
until the Annual Meeting to be held in 2008 or until their successors are duly
elected and qualified. Bruce Simberg, Richard W. Wilcox, Jr. and Peter J.
Prygelski are class II directors and hold office until the 2006 Annual Meeting.
Edward J. Lawson and Richard A. Widdicombe are class I directors and hold office
until the 2007 Annual Meeting.

The accompanying form of proxy when properly executed and returned to us,
will be voted FOR the election to our Board of Directors of the two persons
named below, unless the proxy contains contrary instructions. Proxies cannot be
voted for a greater number of persons than the number of nominees named in the
Proxy Statement. We have no reason to believe that any of the nominees are
unable or unwilling to serve if elected. If any of the nominees should become
unable or unwilling to serve as a director, however, the proxy will be voted for
the election of such person or persons as shall be designated by the Board of
Directors, unless a shareholder has withheld authority or voted against the
slate proposed in this proxy statement.

Nominees

The following persons were recommended by the Board of Directors and are
nominated as directors as follows:

Name Age Position with the Company
---- --- -------------------------

Carl Dorf (1) (2) 64 Director

Charles B. Hart, Jr. (1) (2) (3) 66 Director

Carl Dorf is the principal of Dorf Asset Management, LLC, and is
responsible for all investment decisions made by that company. From January 1991
to February 2001, Mr. Dorf served as the Fund Manager of ING Pilgrim Bank and
Thrift Fund. Prior to his experience at Pilgrim, Mr. Dorf was a principal in
Dorf & Associates, an investment management company. Mr. Dorf was appointed to
the Board of Directors in August 2001.

Charles B. Hart, Jr. has more than 40 years of experience in the insurance
industry. From 1973 to 1999, Mr. Hart served as President of Public Assurance
Group and as General Manager of Operations for Bristol West Insurance Services.
Since 1999, Mr. Hart has acted as an insurance consultant. Mr. Hart was
appointed to the Board of Directors in March 2002.

-----------------
(1) Member of Independent Directors Committee.
(2) Member of Investment Committee.
(3) Member of Audit Committee.

The Board of Directors recommends that shareholders vote "FOR" each of the
nominees for election as directors. Directors must be elected by a plurality of
the votes cast.

Set forth below is certain information concerning the directors who are
not currently standing for election:

Name Age Position with the Company
---- --- -------------------------

Edward J. Lawson (2) 55 President, Chairman of the Board and Director

Richard A. Widdicombe 46 Chief Executive Officer and Director

Bruce F. Simberg (2) 56 Director

Richard W. Wilcox, Jr. (1) (2) (3) 63 Director

Peter J. Prygelski (1) (2) (3) 36 Director

-------------------
(1) Member of Independent Directors Committee.
(2) Member of Investment Committee.
(3) Member of Audit Committee.

Edward J. Lawson co-founded the Company and has served as our President
and Chairman of the Board since the Company's inception in 1991. Mr. Lawson has
more than 18 years' experience in the insurance industry, commencing with the
founding of the Company's initial agency in 1983.

Richard A. Widdicombe was appointed as our Chief Executive Officer in June
2003. Mr. Widdicombe joined the Company in November 1999 as President of
Federated National Insurance Company ("Federated National") and Assurance
Managing General Agents, Inc. ("Assurance MGA"). In August 2001 he was appointed
as the President of American Vehicle Insurance Company ("American Vehicle"). Mr.
Widdicombe holds his adjuster's license and CPCU designation. Mr. Widdicombe is
a member of the Florida Department of Financial Services (previously Florida
Department of Insurance) Initial Disaster Assessment team. Mr. Widdicombe was
appointed to the Board of Directors in August 2001.

Bruce F. Simberg has served as a director of the Company since January
1998. Mr. Simberg has been a practicing attorney for the last 23 years, most
recently as managing partner of Conroy, Simberg, Ganon, Krevans & Abel, P.A., a
law firm in Ft. Lauderdale, Florida, since October 1979. Mr. Simberg was
appointed to the Board of Directors in January 1998.

Richard W. Wilcox, Jr. has been in the insurance industry for almost 40
years. In 1963, Mr. Wilcox began an insurance agency that eventually developed
into a business generating $10 million in annual revenue. In 1991, Mr. Wilcox
sold his agency to Hilb, Rogal and Hamilton Company ("HRH") of Fort Lauderdale,
for which he retained the position of President through 1998. In 1998, HRH of
Fort Lauderdale merged with Poe and Brown of Fort Lauderdale, and Mr. Wilcox
served as the Vice President. Mr. Wilcox retired in 1999 and joined the
Company's Board of Directors in January 2003.

Peter J. Prygelski was appointed as a director of the Company in January
2004. Since April 2004, Mr. Prygelski has been Senior Manager, Business Risk
Services Consulting with Ernst & Young in Fort Lauderdale, Florida. Mr.
Prygelski is also a Certified Internal Auditor with 12 years of experience in
the internal audit department of American Express, where he was most recently
the Director/Assistant General Auditor of American Express Centurion Bank. As
such, Mr. Prygelski managed the company's audit activities and managed a staff
of 12 audit professionals and an annual department budget of $2.5 million. His
responsibilities included preparing and implementing the company's annual audit
plan; supporting the company's audit committee by communicating issues related
to planning, audit results, plan status, and integrated audit coverage; managing
the relationships with senior management, the external auditors, and regulatory
authorities; and addressing risks and control gaps to ensure that the company
maintained an adequate control system.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires executive officers, directors and holders of more than
10% of our Common Stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC") and The Nasdaq National
Market ("Nasdaq"). Such persons are required to furnish us with copies of all
Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, or
oral or written representations from certain reporting persons, we believe that,
with respect to the fiscal year ended December 31, 2004, all filing requirements
applicable to our executive officers, directors and 10% beneficial owners were
complied with, except as follows: Edward J. Lawson and Michele Lawson each made
one late filing disclosing two separate gifts of shares. Carl Dorf made one late
filing disclosing three purchases of shares by him and two sales by his
estranged spouse. Richard W. Wilcox, Jr. made one late filing disclosing four
purchases of shares on the same day.

Corporate Governance

We have adopted a Code of Business Conduct for all employees and a Code of
Ethics for the Chief Executive Officer, President and senior financial officers
including the Chief Financial Officer. Copies of our Code of Business Conduct
and Code of Ethics are available on our web site at www.21stcenturyholding.com.

Meetings and Committees of the Board of Directors

During 2004, the Board of Directors held four formal meetings and took
actions by written consent on 16 occasions. During 2004, no director attended
fewer than 75% of board and committee meetings held during the period such
director served on the Board. We do not have a policy with regard to the
attendance of directors at the annual meeting. All directors attended last
year's annual meeting.

The Board has determined that the following directors are independent
pursuant to NASD Rule 4200 and the Exchange Act: Carl Dorf, Charles B. Hart,
Jr., Peter J. Prygelski, and Richard W. Wilcox, Jr.

The standing committees of the Board of Directors are the Audit Committee,
the Independent Directors Committee and the Investment Committee.

Independent Directors Committee

The Company's Independent Directors Committee is currently composed of Mr.
Dorf, Mr. Hart, Mr. Prygelski, and Mr. Wilcox. This committee meets in executive
session biannually and its duties and responsibilities include, but are not
limited to, the following:

o Function as the Company's Compensation Committee and review and
approve the compensation of our executive officers and directors
o Administer the Company's 1998 Stock Option Plan, 2001 Franchise
Stock Option Plan and 2002 Stock Option Plan
o Function as the Company's Nominating Committee.

The committee held two formal meetings and acted five times by written
consent. The committee reviewed and approved the compensation of the Company's
executive officers.

This year's Board of Director nominees were recommended and approved for
reelection by the full Board of Directors, including the Independent Directors
Committee.

Audit Committee

The Audit Committee is currently composed of Charles B. Hart, Jr., Richard
W. Wilcox, Jr. and Peter J. Prygelski. Mr. Prygelski is a "financial expert" as
that term is defined in the applicable rules and regulations of the Exchange
Act. The Audit Committee met on five occasions in 2004.

Pursuant to its written charter, the duties and responsibilities of the
Audit Committee include, but are not limited to, (a) the appointment of the
independent certified public accountants and any termination of engagement, (b)
reviewing the plan and scope of independent audits, (c) reviewing significant
accounting and reporting policies and operating controls, (d) having general
responsibility for all related auditing and financial statement matters, and (e)
reporting its recommendations and findings to the full Board of Directors. The
Audit Committee pre-approves all auditing services and permitted non-audit
services (including the fees and terms thereof) to be performed by the
independent accountants, subject to the de minimus exceptions for non-audit
services described in Section 10A(i)(1)(B) of the Exchange Act that are approved
by the Audit Committee prior to the completion of the audit.

The Audit Committee has adopted guidelines regarding the engagement of our
independent auditor to perform services for us. For audit services (including
statutory audit engagements as required under state laws), the independent
auditor will provide the Audit Committee with an engagement letter during the
fourth quarter of each year outlining the scope of the audit services proposed
to be performed during the fiscal year. If agreed to by the Audit Committee,
this engagement letter will be formally accepted by the Audit Committee at
either its December or March Audit Committee meeting. The independent auditor
will submit to the Audit Committee for approval an audit services fee proposal
after acceptance of the engagement letter.

For non-audit services, management will submit to the Audit Committee for
approval (during December or June of each fiscal year) the list of non-audit
services that it recommends the Committee engage the independent auditor to
provide for the fiscal year. Our management and the independent auditor will
each confirm to the Audit Committee that each non-audit service on the list is
permissible under all applicable legal requirements. In addition to the list of
planned non-audit services, a budget estimating non-audit service spending for
the fiscal year will be provided. The Audit Committee will approve both the list
of permissible non-audit services and the budget for such services. The Audit
Committee will be informed routinely as to the non-audit services actually
provided by the independent auditor pursuant to this pre-approval process.

To ensure prompt handling of unexpected matters, the Audit Committee
delegates to the Chair the authority to amend or modify the list of approved
permissible non-audit services and fees. The Chair will report action taken to
the Audit Committee at the next committee meeting.

The independent auditor must ensure that all audit and non-audit services
have been approved by the Audit Committee. The Chief Financial Officer is
responsible for tracking all independent auditor fees against the budget for
such services and report at least annually to the Audit Committee.

Investment Committee

The Investment Committee is currently composed of Edward J. Lawson,
Charles B. Hart, Jr., Richard W. Wilcox, Jr., Peter J. Prygelski, Bruce Simberg,
and Carl Dorf. The Investment Committee manages our investment portfolio. The
Investment Committee met informally via teleconference on several occasions in
2004.

Report of the Audit Committee

The following report of the Audit Committee is made pursuant to the rules
of the SEC. This report shall not be deemed incorporated by reference by a
general statement incorporating by reference this Proxy statement into any
filing under the Securities Act of 1933 (the "Securities Act") or the Exchange
Act, except to the extent that we specifically incorporate this information by
reference, and shall not otherwise be deemed filed under such acts.

The Audit Committee hereby reports as follows:

1. The Audit Committee has reviewed and discussed the audited financial
statements with our management.

2. The Audit Committee has discussed with De Meo, Young, McGrath
("DeMeo"), independent accountants, the matters required to be discussed by SAS
61 (Communication with Audit Committees).

3. The Audit Committee has received the written disclosures and the letter
from DeMeo required by the Independence Standards Board No. 1 (Independent
Discussions with Audit Committees), and has discussed with DeMeo their
independence.

4. Based on the review and discussion referred to in paragraphs (1)
through (3) above, the Audit Committee recommended to the Board of the Company,
and the Board has approved, that the audited financial statements be included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2004, for filing with the SEC.

/s/ Peter J. Prygelski, Chairman
/s/ Charles B. Hart, Jr.
/s/ Richard W. Wilcox, Jr.

Director Nomination Process

Shareholders may communicate generally with our Board by contacting our
Secretary. In particular, shareholders may recommend nominees to the Board by
notifying the Secretary, in writing, of the identity of the nominee and
enclosing a resume, curriculum vitae or other relevant information describing
the nominee's qualifications. The Secretary will then forward these materials to
the Independent Directors Committee, functioning as our Nominating Committee,
who will consider the candidate at the next meeting scheduled for the purpose of
considering nominees to the Board.

Shareholders may also nominate directors, along with the presentation of
other business, at our annual meeting, pursuant to Article II, Section 10 of our
Bylaws and SEC regulations. For business to be brought before an annual meeting
by a shareholder, notice thereof must be delivered to or mailed and received at
our principal executive offices, not less than 120 calendar days before the date
of the proxy statement released to shareholders in connection with the previous
year's annual meeting. The Bylaws require a shareholder's notice to the
Secretary to set forth as to each matter the shareholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of the shareholder
proposing such business, (iii) the class and number of shares which are
beneficially owned by the shareholder, and (iv) any material interest of the
shareholder in such business.

With regard to the nomination of directors, such notice shall set forth
(a) as to each person whom the shareholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of capital stock which are
beneficially owned by the person, (iv) the consent of each nominee to serve as a
director if so elected, and (v) any other information relating to the person
that is required to be disclosed in solicitations for proxies for the election
of directors pursuant to Rule 14a-3 under the Exchange Act; and (b) as to the
shareholder giving notice, (i) the name and record address of shareholder, and
(ii) the class and number of shares of capital stock which are beneficially
owned by the shareholder. We may require any proposed nominee to furnish such
other information as may reasonably be required to determine the eligibility of
such proposed nominee to serve as a director.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes compensation earned for the years ended
December 31, 2004, 2003, and 2002, by our Chief Executive Officer and the three
other most highly compensated executive officers whose compensation exceeded
$100,000 during 2004 and is required to be reported (the "named executive
officers").

Long-Term
Annual Compensation (1) Compensation
----------------------- ------------
Securities
Name and Principal Underlying All Other
Position Year Salary($) Bonus($) Options(#) Compensation($)
-------- ---- --------- -------- ---------- ---------------

Richard A. Widdicombe 2004 $143,100 0 -- $ 18,207 (1)
Chief Executive Officer 2003 126,250 0 -- -- (2)
2002 122,200 0 -- -- (2)

Edward J. Lawson 2004 $154,500 0 -- $ 16,160 (3)
President and Chairman 2003 156,000 0 -- -- (2)
2002 156,000 0 -- -- (2)

J. Gordon Jennings, III 2004 $129,577 0 -- $ 11,036 (4)
Chief Financial Officer 2003 104,000 0 -- -- (2)
2002 89,800 0 -- -- (2)

Kent M. Linder 2004 $118,800 0 -- $ 16,157 (5)
Chief Operating Officer 2003 107,000 0 -- -- (2)
2002 104,000 0 -- -- (2)
-----------------

(1) Includes $7,200 car allowance, $851 cellular phone, $8,667 health
insurance premiums, $300 for events attended by officer and/or family and
$1,189 airfare and hotel for management trip including family.
(2) Perquisites and other personal benefits totaling less than the applicable
reporting threshold for 2002 and 2003 have been excluded.
(3) Includes $9,044 car allowance, $1,064 cellular phone, $4,924 health and
dental insurance premiums, $100 for events attended by officer and/or
family and $1,028 airfare and hotel for management trip including family.
(4) Includes $10,536 health insurance premiums and $500 for events attended by
officer and/or family.
(5) Includes $12,935 health and dental insurance premiums, $1,404 cellular
phone, $400 for events attended by officer and/or family and $1,418
airfare and hotel for management trip including family.

Option Grants in Last Fiscal Year

The following table sets forth information concerning individual grants of
stock options made during 2004 to the CFO. We have never granted stock
appreciation rights.

% of Total
Options/
Number of Securities SAR Granted to Exercise or
Underlying Options Employees in Base Price
Name Granted (#)(1) Fiscal Year ($/share) Expiration Date
---- -------------- ----------- --------- ---------------

J. Gordon Jennings, III 30,000 16.8% 20.00 May 6, 2010

Stock Option Exercises and Holdings

The following table sets forth certain information with respect to stock
options and/or warrants exercised during calendar year 2004 by the named
executive officers and unexercised stock options and/or warrants held as of
December 31, 2004 by such executive officers.

Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Underlying Options at Fiscal Year-End At Fiscal Year-End
Options Value -------------------------- ------------------
Name Exercised Realized(1) Exercisable Unexercisable Exercisable(2) Unexercisable(2)
---- --------- ----------- ----------- ------------- -------------- ----------------

Richard A. Widdicombe -- -- 90,000 -- $526,020 --
Edward J. Lawson -- -- 66,324 -- $384,220 --
J. Gordon Jennings, III 16,000 $ 99,328 5,000 59,000 $ 23,665 $151,092
Kent M. Linder -- -- 75,000 -- $392,475 --

-----------------

(1) All values are shown pretax and are rounded to the nearest whole dollar.
(2) Based on a fair market value of $13.90 per share at December 31, 2004.

Independent Directors Committee Report on Executive Compensation

Under rules established by the SEC, we are required to provide a report
explaining the rationale and considerations that led to fundamental compensation
decisions affecting the executive officers (including the named executive
officers) during the past fiscal year. The report of our Independent Directors
Committee for 2004 is set forth below.

Compensation Philosophy

The three principal components of executive compensation are salary, bonus
and stock options. These components are designed to facilitate fulfillment of
the Board's compensation objectives, which include (i) attracting and retaining
competent management, (ii) recognizing individual initiative and achievement,
(iii) rewarding management for short and long term accomplishments, and (iv)
aligning management compensation with the achievement of company goals and
performance.

Base salaries for new management employees are determined initially by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for managerial
talent, including a comparison of base salaries for comparable positions at
similar companies of comparable sales and capitalization. Unless specified in
the executive's employment agreement, annual salary adjustments are determined
by evaluating the competitive marketplace, Company performance, the performance
of the executive, and the responsibilities assumed by the executive.

The Independent Directors Committee endorses the position that equity
ownership by management is beneficial in aligning management's and shareholders'
interests in the enhancement of shareholder value. The Board has used the
selective grant of stock options and shares of Common Stock to accomplish this
goal.

In 2005, the Independent Directors Committee will review existing
management compensation programs on an ongoing basis and will (i) meet with the
Chief Executive Officer to consider and set mutually agreeable performance
standards and goals for members of senior management, as appropriate, or as
otherwise required pursuant to any such officer's employment agreement and (ii)
consider and, as appropriate, approve modifications to such programs to ensure a
proper fit with the philosophy of the Independent Directors Committee and the
agreed-upon standards and goals.

Chief Executive Officer Compensation

The increase in the salary and bonus for Richard A. Widdicombe, our Chief
Executive Officer, pursuant to his employment agreement, included an analysis of
Mr. Widdicombe's contribution to the Company. The Independent Directors
Committee also considered the fiscal 2004 earnings, expectations for the fiscal
year ending December 31, 2005 and other performance measures in determining Mr.
Widdicombe's compensation, but there was no specific relationship or formula by
which such compensation was tied to company performance.

Other Executive Officers' Compensation

Fiscal 2004 base salary and bonuses for our other executive officers were
determined by the Independent Directors Committee. This determination was made
after a review and consideration of a number of factors, including each
executive's level of responsibility and commitment, level of performance (with
respect to specific areas of responsibility and on an overall basis), past and
present contribution to and achievement of Company goals and performance during
fiscal 2004, and our historical compensation levels. Although Company
performance was one of the factors considered, the approval of the Independent
Directors Committee was based upon an overall review of the relevant factors,
and there was no specific relationship or formula by which compensation was tied
to company performance.

Stock Options

We maintain stock option plans, which are designed to attract and retain
directors, executive officers and other employees and to reward them for
delivering long-term value to the Company and its subsidiaries. In determining
the amount and timing of stock option grants, we review the individual's
existing share and option holdings, as well as performance-related factors.

/s/ Carl Dorf, Chairman
/s/ Charles B. Hart
/s/ Richard W. Wilcox, Jr.
/s/ Peter J. Prygelski

Compensation of Directors

Non-employee directors receive cash fees of $1,500 per meeting attended of
the full Board of Directors, $750 per meeting attended of the Audit Committee,
and $500 per meeting attended of the Independent Directors Committee and the
Investment Committee. Directors who are also officers do not receive this
compensation. All directors are reimbursed for travel and lodging expenses in
connection with their attendance at meetings.

In January 2004, Peter J. Prygelski was granted 10,000 six-year options
under the 2002 plan in connection with his joining the Board.

Indemnification Agreements

We have entered into an indemnification agreement with each of our
directors and executive officers. Each indemnification agreement provides that
we will indemnify such person against certain liabilities (including
settlements) and expenses actually and reasonably incurred by him or her in
connection with any threatened or pending legal action, proceeding or
investigation (other than actions brought by us or in our right) to which he or
she is, or is threatened to be, made a party by reason of his or her status as a
director, officer or agent, provided that such director or executive officer
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to our best interests and, with respect to any criminal proceedings,
had no reasonable cause to believe his or her conduct was unlawful. With respect
to any action brought by us or in our right, a director or executive officer
will also be indemnified, to the extent not prohibited by applicable law,
against expenses and amounts paid in settlement, and certain liabilities if so
determined by a court of competent jurisdiction, actually and reasonably
incurred by him or her in connection with such action if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
our best interests.

Employment Agreements

Effective September 1, 1998, we entered into an employment agreement with
Edward J. Lawson, the Company's President. Effective June 10, 2003, we entered
into an employment agreement with Richard A. Widdicombe, the Company's Chief
Executive Officer. Each employment agreement has a "rolling" two-year term, so
that at all times the remaining term of the agreement is two years.

Mr. Lawson's agreement was amended in December 2004 to reduce his annual
salary from $156,000 to $117,000 and to increase his monthly car allowance from
$300 to $1,125. Contemporaneously with this amendment, the employment agreement
of Michele Lawson, Mr. Lawson's spouse and an employee of the Company, was
amended to increase her annual salary to $117,000 from $78,000 and to increase
her car allowance to $1,125 per month from $300 per month.

Mr. Widdicombe's employment agreement currently provides for an annual
salary of $137,800 and a monthly car allowance of $600.

Each employment agreement provides that the executive officer will
continue to receive his salary for a period of two years after the termination
of employment, if his or her employment is terminated for any reason other than
death, disability or Cause (as defined in the employment agreement), or for a
period of two years after termination of the agreement as a result of his or her
disability and a bonus equal to twice the amount paid to the executive officer
during the 12 months preceding the termination, and the executive officer's
estate will receive a lump sum payment equal to two year's salary plus a bonus
equal to twice the amount paid to the executive officer during the 12 months
preceding the termination by reason of his death. Each employment agreement also
prohibits the executive officer from directly or indirectly competing with us
for one year after termination for any reason except a termination without
Cause. If a Change of Control (as defined in the employment agreement) occurs,
the employment agreement provides for the continued employment of the executive
officer for a period of two years following the Change of Control. In addition,
following the Change of Control, if the executive officer's employment is
terminated by the Company other than for Cause or by reason of his death or
disability, or by the executive officer for certain specified reasons (such as a
reduction of compensation or a diminution of duties), he or she will receive a
lump sum cash payment equal to 299% of the cash compensation received by him or
her during the 12 calendar months prior to such termination.

Effective May 6, 2004 we entered into an employment agreement with J.
Gordon Jennings, III, the Company's Chief Financial Officer. The employment
agreement is effective through May 6, 2008 and provides for an annual salary set
at $137,000 and such bonuses and increases as may be awarded by the Board of
Directors.

Independent Directors Committee Interlocks and Insider Participation

During 2004, the Independent Directors Committee consisted of Messrs.
Dorf, Hart, Prygelski, and Wilcox. None is a current or former officer of the
Company or any of its subsidiaries. No committee interlocks with other
companies, within the meaning of the SEC's proxy rules, existed in 2004.

STOCK PERFORMANCE GRAPH

Set forth below is a line graph comparing the dollar change in the
cumulative total shareholder return on the Company's Common Stock for the period
beginning on December 31, 1999 and ending on December 31, 2004 as compared to
the cumulative total return of the Nasdaq Stock Market Index and the cumulative
total return of the SNL Property & Casualty Insurance Index. The graph depicts
the value based on the assumption of a $100 investment with all dividends
reinvested.

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN

Period Ending
-------------
Index 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
----- -------- -------- -------- -------- -------- --------

21st Century Holding Company 100.00 73.14 79.06 347.53 587.52 585.44
NASDAQ Composite 100.00 60.82 48.16 33.11 49.93 54.49
SNL Property & Casualty Insurance Index 100.00 143.42 143.11 134.23 166.08 182.04

[GRAPHIC OMITTED]

Note: The stock price performance shown on the graph above is not necessarily
indicative of future price performance.

CERTAIN TRANSACTIONS

Bruce Simberg, a director, is a partner of the Fort Lauderdale, Florida
law firm of Conroy, Simberg, Ganon, Krevans & Abel, P.A., which renders legal
services to the Company. In 2004, the Company paid legal fees to Conroy,
Simberg, Ganon, Krevans & Abel, P.A. for services rendered in the amount of
approximately $327,000. We believe that the services provided by Conroy,
Simberg, Ganon, Krevans & Abel, P.A. are on terms at least as favorable as those
that we could secure from a non-affiliated third party.

The employment agreement of Michele Lawson, Mr. Lawson's spouse and an
employee of the Company, was amended to increase her annual salary to $117,000
from $78,000 and increase her car allowance to $1,125 from $300 per month. Mrs.
Lawson's duties include overseeing the Company's accounts payable, claims and
commission payment processes.

During 2004, Mr. Lawson's daughter received compensation totaling $70,200
for her services as a vice president of one of the Company's insurance
subsidiaries and as human resources director; Mr. Lawson's sister-in-law
received compensation totaling $62,701 for her services as an underwriter for
one of the Company's insurance subsidiaries; and Mr. Lawson's nephew received
compensation totaling $72,800 for his services as the president of the Company's
premium finance subsidiary. We believe that the compensation provided to these
individuals is comparable to that paid by other companies in our industry and
market for similar positions.

We have adopted a policy that any transactions between the Company and
executive officers, directors, principal shareholders or their affiliates take
place on an arms-length basis and require the approval of a majority of our
independent directors.

PROPOSAL TWO: APPROVAL OF THE POSSIBLE ISSUANCE OF 20% OR MORE OF OUR COMMON
STOCK IN CONNECTION WITH THE SECURITIES ISSUED IN OUR
2004 PRIVATE PLACEMENT

Pursuant to the Nasdaq rules, we are required to submit for approval by
our shareholders any issuance of Common Stock involving the potential issuance
of 20% or more of our Common Stock outstanding immediately before the
transaction.

On September 30, 2004, we completed a private placement of our 6% Senior
Subordinated Notes (the "Notes"), which were offered and sold to accredited
investors as units consisting of one Note with a principal amount of $1,000 and
one warrant to purchase one share of our Common Stock (a "Warrant"). We sold an
aggregate of $12.5 million of Notes in this placement, which resulted in
proceeds (net of placement agent fees of $700,000 and offering expenses of
$32,500) to us of approximately $11.8 million. The net proceeds were used to
increase the surplus of our insurance subsidiaries.

The Notes pay interest at the annual rate of 6%, are subordinated to
senior debt, and mature on September 30, 2007. Quarterly payments of principal
and interest due on the Notes may be made in cash or, at our option, in shares
of our Common Stock. If paid in shares of Common Stock, the number of shares to
be issued is determined by dividing the payment due by 95% of the
weighted-average volume price for the Common Stock on Nasdaq as reported by
Bloomberg Financial Markets for the 20 consecutive trading days preceding the
payment date. We paid the January 2005 quarterly principal and interest payment
on the Notes by issuing 103,870 shares of our Common Stock to the holders of the
notes.

We issued Warrants to purchase shares of our Common Stock to the
purchasers of the Notes and to the placement agent in the offering, J. Giordano
Securities, LLC. Each Warrant entitles the holder to purchase one share of our
Common Stock at an exercise price of $12.75 per share. We issued a total of
1,019,608 Warrants.

The terms of the Warrants provide for anti-dilution adjustments to the
exercise price and the number of shares issuable thereunder upon the occurrence
of certain events typical for private offerings of this type. The Warrants will
be exercisable until September 30, 2007. The Warrants may be redeemed, in whole
or in part, at any time or from time to time, at our sole option, commencing a
year from September 30, 2004 at a redemption price of $0.01 per whole share
underlying the warrants to be redeemed; provided, however, that before any such
call for redemption of the Warrants may occur, the weighted-average volume price
for our Common Stock quoted on Nasdaq shall have been, for 20 consecutive
trading days ending not more than 10 days prior to the notice of redemption,
more than 150% of the exercise price, as such may be adjusted from time to time.
Redemption of the Warrants may only occur upon 30 days' prior written notice to
the holders, such notice to include certification of the trading price of our
Common Stock on Nasdaq as reported by Bloomberg.

Under the terms of the Notes, the number of shares that would be issued to
pay the quarterly principal and interest due is determined based on the market
prices of our Common Stock prior to each quarterly payment date, and therefore
it is not possible to determine precisely the number of shares that ultimately
may be issued by us. Our ability to pay the principal and interest in shares
rather than cash enables us to conserve our cash reserves and deploy them as
needed to fund our operations. In addition, the anti-dilution adjustments to the
Warrants may require us to issue an indeterminate number of additional shares of
Common Stock. The terms of the Notes and

the Warrants provide that we will not issue shares to pay principal and interest
on the notes or make anti-dilution adjustments to the Warrants in violation of
the Nasdaq rule described above. Nevertheless, the Board of Directors desires to
obtain shareholder approval should we decide that payment of principal and
interest in shares of Common Stock rather than cash is in the best interests of
the Company and our shareholders, or should the anti-dilution provisions of the
Warrants be triggered, and the issuances in the aggregate would total more than
20% of our Common Stock outstanding before the sale of the notes.

The Board of Directors recommends that shareholders authorize the
potential issuance of 20% or more of our Common Stock in connection with our
2004 private placement. If the shareholders do not authorize this issuance, the
transactions will, nonetheless, be valid. We may, however, be in violation of
the Nasdaq requirements described above, which could be cited by Nasdaq as a
basis for delisting our shares from Nasdaq.

The Board of Directors recommends that shareholders vote "FOR" this
proposal. The approval of this proposal requires the affirmative vote of a
majority of the total votes cast on the proposal in person or by proxy.

PROPOSAL THREE: APPROVAL OF THE ISSUANCE OF 3,500 SHARES OF
OUR COMMON STOCK TO OUR CHIEF EXECUTIVE OFFICER

Pursuant to Nasdaq Rule 4350(i)(1)(A), we are submitting to our
shareholders, for their approval, the proposed issuance of 3,500 shares of our
Common Stock to our Chief Executive Officer, Richard A. Widdicombe. These shares
were granted by the Board of Directors on March 3, 2005, subject to shareholder
approval, in recognition of Mr. Widdicombe's service to the Company.

Although stock grants have the effect of diluting our other shareholders,
the Board of Directors believes that stock grants play an important role in
providing designated members of our management team with incentives to
contribute to the growth and development of the Company because of the
opportunity to acquire an equity interest in the Company. In our proposed stock
issuance to Mr. Widdicombe, he will receive the opportunity to profit from any
rise in the market value of our Common Stock.

These shares will be issued in reliance on the exemption provided by
Section 4(2) of the Securities Act as a transaction not involving a public
offering.

PROPOSAL FOUR: RATIFICATION OF SELECTION OF AUDITORS

The selection of DeMeo Young McGrath ("DeMeo") to serve as the independent
auditors of the Company for the fiscal year ended December 31, 2004, will be
submitted to the shareholders of the Corporation for ratification at the
Meeting. Representatives of DeMeo will be present at the Meeting, will have the
opportunity to make a statement if they so desire and will be available to
answer appropriate questions.

DeMeo has served as the Company's independent auditors for each fiscal
year since 2002. McKean, Paul, Chrycy, Fletcher & Co. ("McKean") were the
Company's independent auditors prior to 2002.

DeMeo has advised the Company that neither it, nor any of its members, has
any direct financial interest in the Company as a promoter, underwriter, voting
trustee, director, officer or employee. All professional services rendered by
DeMeo during the fiscal year ended December 31, 2004 were furnished at customary
rates.

For the fiscal year ended December 31, 2004, fees for services provided by
DeMeo and McKean were as follows:

DeMeo McKean
----- ------
Audit Fees(1) $290,302 $ 16,713

Audit-Related Fees(2) $ 22,743 $ 0

Tax Fees(3) $ 56,748 $ 0
-------- --------

Total $369,793 $ 16,713
-----------------

(1) Audit fees consisted of audit work performed in the preparation of
financial statements, as well as work generally only the independent
auditor can reasonably be expected to provide, such as statutory
audits.

(2) Audit-related fees consisted primarily of audits of employee benefit
plans and special procedures related to regulatory filings in 2004.

(3) Tax fees consisted primarily of assistance with tax compliance and
reporting.

OTHER BUSINESS

The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies in their
discretion as they may deem appropriate, unless they are directed by a proxy to
do otherwise.

HOUSEHOLDING OF ANNUAL DISCLOSURE DOCUMENTS

As permitted by the Exchange Act, only one copy of this Proxy Statement is
being delivered to shareholders residing at the same address, unless such
shareholders have notified us of their desire to receive multiple copies of the
Proxy Statement.

We will promptly deliver, upon oral or written request, a separate copy of
the Proxy Statement to any shareholder residing at an address to which only one
copy was mailed. Requests for additional copies should be directed to our Chief
Financial Officer by phone at (954) 581-9993 or by mail to the Chief Financial
Officer, 3661 West Oakland Park Boulevard, Suite 300, Lauderdale Lakes, Florida
33311.

Shareholders residing at the same address and currently receiving only one
copy of the Proxy Statement may contact our Chief Financial Officer by phone at
(954) 581-9993 or by mail to the Chief Financial Officer, 3661 West Oakland Park
Boulevard, Suite 300, Lauderdale Lakes, Florida 33311 to request multiple copies
of the Proxy Statement in the future.

INFORMATION CONCERNING SHAREHOLDER PROPOSALS

Pursuant to Rule 14a-8 of the SEC's proxy rules, a shareholder intending
to present a proposal to be included in the proxy statement for our 2006 Annual
Meeting of Shareholders must deliver a proposal in writing to our principal
executive office no later than January 16, 2006.

Shareholder proposals intended to be presented at, but not included in the
proxy materials for that meeting must be received by us no later than March 23,
2006, at our principal executive offices; otherwise, such proposals will be
subject to the grant of discretionary authority contained in the form of proxy
to vote on them.

By Order of the Board of Directors

REBECCA L. CAMPILLO, Secretary
Lauderdale Lakes, Florida
May XX, 2005

21st CENTURY HOLDING COMPANY

ANNUAL MEETING OF SHAREHOLDERS - JUNE 21, 2005

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
21st CENTURY HOLDING COMPANY

The undersigned hereby appoints Edward J. Lawson and Richard A.
Widdicombe, as Proxies, each with full power to appoint a substitute, to
represent and to vote, with all the powers the undersigned would have if
personally present, all the shares of common stock, $.01 par value per share
(the "Common Stock"), of 21st Century Holding Company (the "Company") held of
record by the undersigned on April 15, 2005 at the Annual Meeting of
Shareholders to be held on June 21, 2005 or any adjournments or postponements
thereof.

Proposal 1. ELECTION OF DIRECTORS

| | FOR ALL THE NOMINEES LISTED BELOW
| | WITHHOLD AUTHORITY (except as marked to the contrary below) TO VOTE FOR
ALL NOMINEES LISTED BELOW.

Carl Dorf Charles B. Hart, Jr.

(INSTRUCTION: To withhold authority for any individual nominees, write that
nominee's name in the space below.)
--------------------------------------------------------------------------------
Proposal 2. APPROVAL OF THE POSSIBLE ISSUANCE OF 20% OR MORE OF THE COMPANY'S
COMMON STOCK IN CONNECTION WITH SECURITIES ISSUED IN THE COMPANY'S 2004 PRIVATE
PLACEMENT

| | For | | Against | | Abstain
--------------------------------------------------------------------------------
Proposal 3. APPROVAL OF THE ISSUANCE OF 3,500 SHARES OF THE COMPANY'S COMMON
STOCK TO THE COMPANY'S CHIEF EXECUTIVE OFFICER

| | For | | Against | | Abstain
------------------------------------------------------------------------------
Proposal 4. RATIFICATION OF SELECTION OF DEMEO YOUNG MCGRATH AS THE COMPANY'S
INDEPDENDENT AUDITORS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

| | For | | Against | | Abstain
--------------------------------------------------------------------------------
In their discretion, the Proxies are authorized to vote upon other
business as may come before the meeting.

This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, the Proxy will
be voted FOR Proposals 1, 2, 3 and 4.

Dated: ___________________, 2005

-------------------------------- --------------------------------
(Signature) (Signature)

PLEASE SIGN HERE

Please date this proxy and sign your name exactly as it appears hereon.

Where there is more than one owner, each should sign. When signing as an agent,
attorney, administrator, executor, guardian, or trustee, please add your title
as such. If executed by a corporation, the proxy should be signed by a duly
authorized officer who should indicate his office.

PLEASE DATE, SIGN, AND MAIL THIS PROXY CARD IN THE ENCLOSED ENVELOPENO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.