Exhibit 10.6
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made as of the
21st day of September, 1998, by and between SPURLOCK INDUSTRIES, INC., a
Virginia corporation (the "Corporation"), and Lance K. Hoboy, a Maryland
resident (the "Indemnitee"). It recites and provides as follows:
RECITALS:
A. The Indemnitee is a director of the Corporation.
B. The Indemnitee has requested that the Corporation indemnify him from
liability arising from his service as a director of the Corporation, and the
Corporation has agreed to provide such indemnification pursuant to this
Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of ten dollars and other good and
valuable consideration, the receipt and adequacy of which is acknowledged, the
parties agree as follows:
1. Indemnification of Indemnitee. The Corporation hereby agrees to
indemnify the Indemnitee and to hold him harmless from and against: (a) any and
all claims, losses, liabilities, obligations, damages, deficiencies, costs and
expenses, including without limitation, expenses of investigation and reasonable
attorneys' fees and disbursements, suffered by him of every kind, nature and
description, as a result of his service as a director of the Corporation; and
(b) all actions, suits, proceedings, arbitrations, demands, assessments and
judgments, incident to the foregoing; provided, however, the Indemnitee shall
not be entitled to indemnification under this Agreement if such indemnification
is not permitted by applicable federal, state or securities law or the Articles
of Incorporation of the Corporation. This indemnification shall be in addition
to any other rights the Indemnitee may have at law or equity, and the Indemnitee
need not pursue or exhaust any remedies before being entitled to indemnification
hereunder.
2. Indemnification Procedures. All claims for indemnification under
this Agreement shall be asserted and resolved as follows:
(a) In the event that any claim, or claims, is asserted
against the Indemnitee (a "Claim") which could give rise to a right of
indemnification under this Agreement, the Indemnitee shall promptly (i) notify
the Corporation of such Claim and (ii) deliver to the Corporation a written
notice ("Claim Notice") describing in reasonable detail the nature of the Claim
and a copy of all papers served with respect to the Claim (if any). Within
fifteen (15) calendar days after receipt of any Claim Notice (the "Election
Period"), the Corporation shall notify the Indemnitee whether the Corporation
desires to defend the Indemnitee against such Claim at its sole cost and
expense.
(b) If the Corporation notifies the Indemnitee within the
Election Period that it intends to assume the defense of the Claim, then the
Corporation shall have the right to defend, at its sole cost and expense, such
Claim by all appropriate proceedings, which proceedings shall be
prosecuted diligently by attorneys mutually acceptable to the Indemnitee and the
Corporation, until final conclusion or settlement at the discretion of the
Corporation in accordance with this Section 2(b). The Corporation shall have
full control of such defense proceedings, including any compromise or settlement
thereof, provided, however, that (i) the Corporation shall not settle the Claim
without the consent in writing of the Indemnitee (which consent shall not be
unreasonably withheld, but may include, at the Indemnitee's sole discretion, as
a condition precedent, the grant of a release, in form satisfactory to the
Indemnitee in favor of the Indemnitee by the party bringing the Claim), and (ii)
any such settlement shall not provide for injunctive or other equitable relief
against the Indemnitee. The Indemnitee may participate in, but not control, any
defense or settlement of any Claim controlled by the Corporation pursuant to
this Section 2(b).
(c) If, with respect to a Claim, the Corporation fails to
notify the Indemnitee within the Election Period that the Corporation elects to
defend the Indemnitee pursuant to Section 2(b) or if the Corporation elects to
defend the Indemnitee pursuant to Section 2(b) but fails to diligently and
promptly prosecute or settle such Claim, then the Indemnitee shall have the
right to defend such Claim by all appropriate proceedings, which proceedings
shall be promptly and vigorously prosecuted by the Indemnitee until final
conclusion or settlement. The Indemnitee shall have full control of such defense
and proceedings, provided however, that if requested by the Indemnitee, the
Corporation agrees, at its cost and expense, to cooperate with the Indemnitee
and its counsel in contesting any Claim which the Indemnitee is contesting, or,
if appropriate and related to the Claim in question, in making any counterclaim
against the person asserting the Claim, or any cross-complaint against any
person. Notwithstanding the foregoing, if the Corporation has delivered a
written notice to the Indemnitee to the effect that the Corporation disputes its
potential liability to the Indemnitee under this Agreement and if such dispute
is resolved in favor of the Corporation, by final, nonappealable order of a
court of competent jurisdiction, the Corporation shall not be required to bear
the cost and expenses of the Indemnitee's defense pursuant to this Section 2 or
of the Corporation's participation therein at the Indemnitee's request and the
Indemnitee shall reimburse the Corporation in full for all costs and expenses of
such litigation. The Corporation may participate in, but not control, any
defense or settlement controlled by the Indemnitee pursuant to this Section 2,
and the Corporation shall bear its own costs and expenses with respect to such
participation.
3. Payment of Indemnification Claims. If the Indemnitee asserts an
indemnification claim under this Agreement which is not disputed by the
Corporation, the amount of such claim shall be paid within fifteen (15) days
after the date the Corporation advises the Indemnitee in writing that it does
not dispute the asserted indemnification claim(s) of the Indemnitee. If the
Indemnitee asserts a claim under this Agreement which is disputed by the
Corporation, then the Corporation shall pay to the Indemnitee the amount of the
final judgment, award or settlement in respect of such claim within fifteen (15)
calendar days after the date of such final judgment, award or settlement.
4. Survival of Indemnification. This Agreement shall survive
termination of the Indemnitee's status as a director of the Corporation.
5. Binding Effect; Benefit. This Agreement supersedes all prior
agreements between the parties, whether written or oral, with respect to the
subject matter hereof and shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and assigns, any rights,
remedies, obligations or
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liabilities under or by reason of this Agreement.
6. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or when received if
sent by registered or certified mail to the parties at the following addresses
(or such other address as a party may specify by notice):
If to the Corporation:
Spurlock Industries, Inc.
Post Office Box 8
209 West Main Street
Waverly, Virginia 23890
Attention: Chief Executive Officer
with copy to:
Williams, Mullen, Christian & Dobbins, P.C.
Two James Center
1021 East Cary Street
Richmond, Virginia 23219
Attention: William L. Pitman, Esquire
If to the Indemnitee:
Lance K. Hoboy
Schwan's Foods International
11819 Gordon Road
Silver Spring, Maryland 20904
7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
8. Applicable Law. This Agreement shall be interpreted, governed and
enforced in accordance with the laws of the Commonwealth of Virginia. Venue for
the resolution of any dispute or breach hereof shall be an appropriate state or
federal court in the County of Sussex or City of Richmond, Virginia.
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WITNESS the following signatures and seals as of the date first above
written.
SPURLOCK INDUSTRIES, INC.,
a Virginia corporation
By: /s/ Phillip S. Sumpter
-----------------------------(SEAL)
Name: Phillip S. Sumpter
Title:
INDEMNITEE:
/s/ Lance K. Hoboy
---------------------------------(SEAL)
Lance K. Hoboy
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