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Exhibit 10.2
INDEMNIFICATION AGREEMENT
This Indemnification Agreement is made this 13th day of August, between
Belmont Homes, Inc., a Mississippi corporation (the "Company"), and ___________
(the "Indemnitee").
W I T N E S S E T H:
WHEREAS, it is essential to the Company and its shareholders to attract
and retain qualified and capable directors, officers, employees, agents and
fiduciaries; and
WHEREAS, the Restated Articles of Incorporation of the Company (the
"Restated Articles of Incorporation") require the Company to indemnify and
advance expenses to its directors and officers to the fullest extent authorized
by law and allows the Company to indemnify employees and agents to the fullest
extent authorized by law; and
WHEREAS, it is the policy of the Company to indemnify its directors and
officers so as to provide them with the maximum possible protection permitted by
law; and
WHEREAS, in recognition of Indemnitee's need for protection against
personal liability in order to induce Indemnitee to serve or continue to serve
the Company in an effective manner, and, in the case of directors and officers,
to supplement or replace the Company's directors' and officers' liability
insurance coverage, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by the Restated Articles of Incorporation
will be available to Indemnitee (regardless of, among other things, any
amendment to or revocation of the Restated Articles of Incorporation or any
change in the composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), the Company wishes to provide the
Indemnitee with the benefits contemplated by this Agreement; and
WHEREAS, as a result of the provision of such benefits Indemnitee has
agreed to serve or to continue to serve the Company;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following respective meanings:
(a) An Affiliate: of a specified Person is a Person who
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified. The term
Associate used to indicate a relationship with any Person shall mean (i) any
corporation or organization (other than the Company or a Subsidiary) of which
such Person is an officer or partner or is, directly, or indirectly, the
Beneficial Owner of ten (10) percent or more of any class of Equity Securities,
(ii) any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity
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(other than an Employee Plan Trustee), (iii) any Relative of such Person, or
(iv) any officer or director of any corporation controlling or controlled by
such Person.
(b) Beneficial Ownership: shall be determined, and a Person
shall be the Beneficial Owner of all securities which such Person is deemed to
own beneficially, pursuant to Rule 13d-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (or any successor rule or
statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall
be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3
as in effect on the date hereof; provided, however, that a Person shall, in any
event, also be deemed to be the Beneficial Owner of any Voting Shares: (A) of
which such Person or any of its Affiliates or Associates is, directly or
indirectly, the Beneficial Owner, or (B) of which such Person or any of its
Affiliates or Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants, or options, or otherwise, or (ii) sole or
shared voting or investment power with respect thereto pursuant to any
agreement, arrangement, understanding, relationship or otherwise (but shall not
be deemed to be the Beneficial Owner of any Voting Shares solely by reason of a
revocable proxy granted for a particular meeting of shareholders, pursuant to a
public solicitation of proxies for such meeting, with respect to shares of which
neither such Person nor any such Affiliate or Associate is otherwise deemed the
Beneficial Owner), or (C) of which any other Person is, directly or indirectly,
the Beneficial Owner if such first mentioned Person or any of its Affiliates or
Associates acts with such other Person as a partnership, syndicate or other
group pursuant to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of capital stock of the
Company; and provided further, however, that (i) no director or officer of the
Company, nor any Associate or Affiliate of any such director or officer, shall,
solely by reason of any or all of such directors and officers acting in their
capacities as such, be deemed for any purposes hereof, to be the Beneficial
Owner of any Voting Shares of which any other such director or officer (or any
Associate or Affiliate thereof) is the Beneficial Owner and (ii) no trustee of
an employee stock ownership or similar plan of the Company or any Subsidiary
("Employee Plan Trustee") or any Associate or Affiliate of any such Trustee,
shall, solely by reason of being an Employee Plan Trustee or Associate or
Affiliate of an Employee Plan Trustee, be deemed for any purposes hereof to be
the Beneficial Owner of any Voting Shares held by or under any such plan.
(c) A Change in Control: shall be deemed to have occurred if
(A) any Person (other than (i) the Company or any Subsidiary, (ii) any pension,
profit sharing, employee stock ownership or other employee benefit plan of the
Company or any Subsidiary or any trustee of or fiduciary with respect to any
such plan when acting in such capacity, or (iii) any Person who is as of the
date and time of this Agreement the Beneficial Owner of 20% or more of the total
voting power of the Voting Shares) is or becomes, after the date of this
Agreement, the Beneficial Owner of 20% or more of the total voting power of the
Voting Shares, (B) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company
and any new director whose election or appointment by the Board of Directors or
nomination or recommendation for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved,
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cease for any reason to constitute a majority thereof, (C) the shareholders of
the Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
Voting Shares of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into Voting
Shares of the surviving entity) at least 80% of the total voting power
represented by the Voting Shares of the Company or such surviving entity
outstanding, or the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets, or (D) a change in
control of a nature that would be required to be reported in response to Item
5(f) of Schedule 14A of Regulation 14 promulgated under the Securities Act of
1934, as amended, as in effect on the date hereof.
(d) Claim: means any threatened, pending or completed action,
suit, arbitration or proceeding, or any inquiry or investigation, whether
brought by or in the right of the Company or otherwise, that Indemnitee in good
faith believes might lead to the institution of any such action, suit,
arbitration or proceeding, whether civil, criminal, administrative,
investigative or other, or any appeal therefrom.
(e) Equity Security: shall have the meaning given to such
term under Rule 3a11-1 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on the date hereof.
(f) D&O Insurance: means any valid directors' and officers'
liability insurance policy maintained by the Company for the benefit of the
Indemnitee, if any.
(g) Determination: means a determination, and "Determined"
means a matter which has been determined based on the facts known at the time,
by: (i) a majority vote of a quorum of disinterested directors, or (ii) if such
a quorum is not obtainable, or even if obtainable, if a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or, in
the event there has been a Change in Control, by (A) Special Independent Counsel
(in a written opinion) selected by Indemnitee as set forth in Section 6, or (B)
the Board of Directors of the Company or of the ultimate parent entity of the
Company as set forth in Section 6, or (iii) a majority of the disinterested
shareholders of the Company, or (iv) a final adjudication by a court of
competent jurisdiction.
(h) Excluded Claim: means any payment for Losses or Expenses
in connection with any Claim: (i) based upon or attributable to Indemnitee
gaining in fact any personal profit or advantage to which Indemnitee is not
entitled; or (ii) for the return by Indemnitee of any remuneration paid to
Indemnitee without the previous approval of the shareholders of the Company
which is illegal; or (iii) for an accounting of profits in fact made from the
purchase or sale by Indemnitee of securities of the Company within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, or similar
provisions of any state law; or (iv) resulting from Indemnitee's knowingly
fraudulent, dishonest or willful misconduct; or (v) the payment of which by the
Company under this Agreement is not permitted by applicable law.
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(i) Expenses: means any reasonable expenses incurred by
Indemnitee as a result of a Claim or Claims made against Indemnitee for
Indemnifiable Events including, without limitation, attorneys' fees and all
other costs, expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in any Claim
relating to any Indemnifiable Event.
(j) Fines: means any fine, penalty or, with respect to an
employee benefit plan, any excise tax or penalty assessed with respect thereto.
(k) Indemnifiable Event: means any event or occurrence,
occurring prior to or after the date of this Agreement, related to the fact that
Indemnitee is or was a director, officer, employee, trustee, agent or fiduciary
of the Company or its Predecessor Entities, or is or was serving at the request
of the Company or its Predecessor Entities as a director, officer, employee,
trustee, agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of anything done
or not done by Indemnitee, including, but not limited to, any breach of duty,
neglect, error, misstatement, misleading statement, omission, or other act done
or wrongfully attempted by Indemnitee, or any of the foregoing alleged by any
claimant, in any such capacity.
(l) Losses: means any amounts or sums which Indemnitee is
legally obligated to pay as a result of a Claim or Claims made against
Indemnitee for Indemnifiable Events including, without limitation, damages,
judgments and sums or amounts paid in settlement of a Claim or Claims, and
Fines.
(m) Person: means any individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.
(n) Predecessor Entities: includes: Belmont Holdings, Inc.,
a Mississippi corporation.
(o) Relative: means a Person's spouse, parents, children,
siblings, mothers- and father-in-law, sons- and daughters-in-law, and brothers-
and sisters-in-law.
(p) Reviewing Party: means any appropriate person or body
consisting of a member or members of the Company's Board of Directors or any
other person or body appointed by the Board (including the Special Independent
Counsel referred to in Section 6) who is not a party to the particular Claim for
which Indemnitee is seeking indemnification.
(q) Subsidiary: means any corporation of which fifty percent
of any class of Equity Security is owned, directly or indirectly, by the
Company.
(r) Voting Shares: means any issued and outstanding shares of
capital stock of the Company entitled to vote generally in the election of
directors.
2. Basic Indemnification Agreement. In consideration of, and as an
inducement to, the Indemnitee rendering valuable services to the Company, the
Company agrees that in the event
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Indemnitee is or becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant in, a Claim by
reason of (or arising in part out of) an Indemnifiable Event, the Company will
advance Expenses to and indemnify Indemnitee to the fullest extent authorized by
law, against any and all Expenses and Losses (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses and Losses) of such Claim, whether or not such Claim proceeds
to judgment or is settled or otherwise is brought to a final disposition,
subject in each case, to the further provisions of this Agreement.
3. Limitations on Indemnification. Notwithstanding the provisions of
Section 2, Indemnitee shall not be indemnified and held harmless from any Losses
or Expenses (a) which have been Determined, as provided herein, to constitute an
Excluded Claim; (b) to the extent Indemnitee is indemnified by the Company and
has actually received payment pursuant to the Restated Articles of
Incorporation, D&O Insurance, or otherwise; or (c) other than pursuant to the
last sentence of Section 4(d) or Section 13, in connection with any Claim
initiated by Indemnitee, unless the Company has joined in or the Board of
Directors has authorized such Claim.
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4. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of any
Claim, Indemnitee shall, if indemnification with respect thereto may be sought
from the Company under this Agreement, notify the Company of the commencement
thereof and Indemnitee agrees further not to make any admission or effect any
settlement with respect to such Claim without the consent of the Company, except
any Claim with respect to which the Indemnitee has undertaken the defense in
accordance with the second to last sentence of Section 4(d).
(b) If, at the time of the receipt of such notice, the Company
has D&O Insurance in effect, the Company shall give prompt notice of the
commencement of Claim to the insurers in accordance with the procedures set
forth in the respective policies. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such Claim.
(c) To the extent the Company does not, at the time of the
Claim have applicable D&O Insurance, or if a Determination is made that any
Expenses arising out of such Claim will not be payable under the D&O Insurance
then in effect, the Company shall be obligated to pay the Expenses of any Claim
in advance of the final disposition thereof and the Company, if appropriate,
shall be entitled to assume the defense of such Claim, with counsel satisfactory
to Indemnitee, upon the delivery to Indemnitee of written notice of its election
so to do. After delivery of such notice, the Company will not be liable to
Indemnitee under this Agreement for any legal or other Expenses subsequently
incurred by the Indemnitee in connection with such defense other than reasonable
Expenses of investigation; provided that Indemnitee shall have the right to
employ its counsel in such Claim but the fees and expenses of such counsel
incurred after delivery of notice from the Company of its assumption of such
defense shall be at the Indemnitee's expense; provided further that if: (i) the
employment of counsel by Indemnitee has been previously authorized by the
Company; (ii) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense; or (iii) the Company shall not, in fact, have employed counsel to
assume the defense of such action, the reasonable fees and expenses of counsel
shall be at the expense of the Company. In addition, Indemnitee shall have the
right to appeal any Determination to a court of competent jurisdiction, and if
successful shall be entitled to receive indemnification against and for Losses
and Expenses incurred in connection with such appeal
(d) All payments on account of the Company's indemnification
obligations under this Agreement shall be made within sixty (60) days of
Indemnitee's written request therefor unless a Determination is made that the
Claims giving rise to Indemnitee's request are Excluded Claims or otherwise not
payable under this Agreement, provided that all payments on account of the
Company's obligation to pay Expenses under Section 4(c) of this Agreement prior
to the final disposition of any Claim shall be made within twenty (20) days of
Indemnitee's written request therefor and such obligation shall not be subject
to any such Determination but shall be subject to Section 4(e) of this
Agreement. In the event the Company takes the position that the Indemnitee is
not entitled to indemnification in connection with the proposed settlement of
any Claim, the Indemnitee shall have the right at its own expense to undertake
defense of any such Claim, insofar
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as such proceeding involves Claims against the Indemnitee, by written notice
given to the Company within ten (10) days after the Company has notified the
Indemnitee in writing of its contention that the Indemnitee is not entitled to
indemnification. If it is subsequently determined in connection with such
proceeding that the Indemnifiable Events are not Excluded Claims and that the
Indemnitee, therefore, is entitled to be indemnified under the provisions of
Section 2 hereof, the Company shall promptly indemnify the Indemnitee.
(e) Indemnitee hereby expressly undertakes and agrees to
reimburse the Company for all Losses and Expenses paid by the Company in
connection with any Claim against Indemnitee in the event and only to the extent
that a Determination shall have been made by a court of competent jurisdiction
in a decision from which there is no further right to appeal that Indemnitee is
not entitled to be indemnified by the Company for such Losses and Expenses
because the Claim is an Excluded Claim or because Indemnitee is otherwise not
entitled to payment under this Agreement.
5. Settlement. The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any Claim
effected without the Company's prior written consent. The Company shall not
settle any Claim in which it takes the position that Indemnitee is not entitled
to indemnification in connection with such settlement without the consent of the
Indemnitee, nor shall the Company settle any Claim in any manner which would
impose any Fine or any obligation on Indemnitee, without Indemnitee's written
consent. Neither the Company nor Indemnitee shall unreasonably withhold their
consent to any proposed settlement.
6. Change in Control; Extraordinary Transactions. The Company and
Indemnitee agree that if there is a Change in Control of the Company (other than
a Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control)
then all Determinations thereafter with respect to the rights of Indemnitee to
be paid Losses and Expenses under this Agreement shall be made only by a special
independent counsel (the "Special Independent Counsel") selected by Indemnitee
and approved by the Company (which approval shall not be unreasonably withheld)
or by a court of competent jurisdiction. The Company and the Indemnitee agree
that if there is a Change of Control which has been approved by a majority of
the Company's Board of Directors who were directors immediately prior to such
Change of Control then all Determinations thereafter with respect to the rights
of Indemnitee to be paid Losses and Expenses under this Agreement shall be made
by a majority vote of a quorum of disinterested directors of the Company or, if
the Company is a subsidiary of any other Person, then by a majority vote of a
quorum of disinterested directors of the ultimate parent entity of the Company,
or, in either case, by a court of competent jurisdiction. The Company shall pay
the reasonable fees of such Special Independent Counsel and shall indemnify such
Special Independent Counsel against any and all reasonable expenses (including
reasonable attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.
The Company covenants and agrees that, in the event of a Change in
Control of the sort set forth in clause (B) of Section 1(c), the Company will
use its best efforts (a) to have the obligations of the Company under this
Agreement expressly assumed by the surviving, purchasing or
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succeeding entity, or (b) otherwise to adequately provide for the satisfaction
of the Company's obligations under this Agreement, in a manner reasonably
acceptable to the Indemnitee.
7. No Presumption. For purposes of this Agreement, the termination of
any Claim by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
8. Non-exclusivity, Duration, Etc. The rights of the Indemnitee
hereunder shall be in addition to any other rights Indemnitee may have under the
Restated Articles of Incorporation, the Company's Bylaws, the Mississippi
Business Corporation Act, any vote of shareholders or disinterested directors or
otherwise, both as to action in the Indemnitee's official capacity and as to
action in any other capacity by holding such office, and the rights and
obligations under this Agreement shall continue in full force and effect after
the Indemnitee ceases to serve the Company as a director, officer, employee,
agent or fiduciary, and for so long as the Indemnitee shall be subject to any
Claim by reason of (or arising in part out of) an Indemnifiable Event and until
all applicable statutes of limitation have expired. To the extent that a change
in the Mississippi Business Corporation Act (whether by statute or judicial
decision) permits greater indemnification by agreement than would be afforded
currently under the Restated Articles of Incorporation and this Agreement, it is
the intent of the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee, if an officer or director of the Company, shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any director or officer of the
Company.
10. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
11. Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses and Losses of a Claim but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding
any other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims relating
in whole or in part to any Indemnifiable Event or in defense of any issue or
matter therein, including dismissal without prejudice, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith. In connection
with any Determination as to whether Indemnitee is entitled to be indemnified
hereunder the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
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12. Liability of Company. The Indemnitee agrees that neither the
shareholders nor the directors nor any officer, employee, representative or
agent of the Company shall be personally liable for the satisfaction of the
Company's obligations under this Agreement and the Indemnitee shall look solely
to the assets of the Company for satisfaction of any claims hereunder.
13. Enforcement.
(a) Indemnitee's right to indemnification and other rights
under this Agreement shall be specifically enforceable by Indemnitee only in the
state or Federal courts of the State of Mississippi and shall be enforceable
notwithstanding any adverse Determination by the Company's Board of Directors,
independent legal counsel, the Special Independent Counsel or the Company's
shareholders and no such Determination shall create a presumption that
Indemnitee is not entitled to be indemnified hereunder. In any such action the
Company shall have the burden of proving that indemnification is not required
under this Agreement.
(b) In the event that any action is instituted by Indemnitee under this
Agreement, or to enforce or interpret any of the terms of this Agreement,
Indemnitee shall be entitled to be paid all court costs and reasonable expenses,
including reasonable counsel fees, incurred by Indemnitee with respect to such
action, unless the court determines that each of the material assertions made by
Indemnitee as a basis for such action were not made in good faith or were
frivolous.
14. Severability. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do an act which
is in violation of applicable law, such provision (including any provision
within a single section, paragraph or sentence) shall be limited or modified in
its application to the minimum extent necessary to avoid a violation of law,
and, as so limited or modified, such provision and the balance of this Agreement
shall be enforceable in accordance with their terms to the fullest extent
permitted by law.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Mississippi applicable to agreements
made and to be performed entirely within such State, without reference to the
choice of law provisions of such State.
16. Consent to Jurisdiction. The Company and the Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of
Mississippi for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any action instituted
under this Agreement shall be brought only in the state and Federal courts of
the State of Mississippi.
17. Notices. All notices, or other communications required or permitted
hereunder shall be sufficiently given for all purposes if in writing and
personally delivered, telegraphed, telexed, sent by facsimile transmission or
sent by registered or certified mail, return receipt requested, with postage
prepaid addressed as follows, or to such other address as the parties shall have
given notice of pursuant hereto:
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(a) If to the Company, to:
Belmont Homes, Inc.
Highway 25 South
Industrial Park Drive
Belmont, Mississippi 38827
Attention: President
(b) If to the Indemnitee, to:
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18. Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original and all of which, when taken together, shall
constitute one and the same instrument.
19. Successors and Assigns. This Agreement shall be (i) binding upon
all successors and assigns of the Company, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, and (ii) shall
be binding upon and inure to the benefit of any successors and assigns, heirs,
and personal or legal representatives of Indemnitee.
20. Amendment; Waiver. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in a writing
signed by each of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement as of the day and year first above written.
BELMONT HOMES, INC.
By:
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Name:
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Title:
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INDEMNITEE
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Name:
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