Exhibit 10.5

                            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 Kirk J. Passopulo,  a Virginia
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


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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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<PAGE>

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:

                  Kirk J. Passopulo
                  Spurlock Industries, Inc.
                  209 West Main Street
                  Waverly, Virginia  23890

         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)
                                              Phillip S. Sumpter
                                              Chairman of the Board and
                                                  Chief Executive Officer



                                          INDEMNITEE:


                                          /s/ Kirk J. Passopulo
                                          --------------------------------(SEAL)
                                          Kirk J. Passopulo






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