UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Wellington Hall, Limited
(Name of Issuer)
Common Stock
(Title of Class of Securities)
949535207
(CUSIP Number)
Arthur F. Bingham, 315 3rd Avenue,N.W., Hickory, NC 28601 (704) 322-5313
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
February 12, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3)
or (4), check the following box .
Check the following box if a fee is being paid with this
statement . (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting beneficial
ownership of more than five percent of the class of securities
described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter the disclosures provided
in a prior cover page.
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No.
1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Arthur F. Bingham
SS# ###-##-####
2) Check the Appropriate Box if a Member of a Group* (a)
(b)
3) SEC Use Only
4) Source of Funds*
PF
5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6) Citizenship or Place of Organization
United States of America
Number of 7) Sole Voting Power
Shares 605,437
Beneficially 8) Shared Voting Power
Owned By -0-
Each 9) Sole Dispositive Power
Reporting 605,437
Person 10) Shared Dispositive Power
With -0-
11) Aggregate Amount Beneficially Owned by Each Reporting Person
605,437
12) Check box if the Aggregate Amount in Row (11) Excludes
Certain Shares*
13) Percent of Class Represented by Amount in Row (11)
26.4%
14) Type of Reporting Person*
<PAGE>
Item 1. Security and Issuer
This statement on Schedule 13D (the "Schedule") is filed by
Arthur F. Bingham and relates to shares of common stock, no par
value (the "Common Stock") of Wellington Hall, Limited (the
"Issuer"). Wellington Hall is located at Route 1, U.S. Highway
Nos. 29 and 70 North, Lexington, North Carolina 27292.
Item 2. Identity and Background
Arthur F. Bingham's principal occupation is Senior Executive
Vice President of Sales and Marketing of the Issuer. His office
is located at 315 3rd Avenue N.W., Hickory, North Carolina 28601.
Mr. Bingham has not been convicted in any criminal proceeding
during the past five years, nor has he been found to have
violated any federal or state securities laws. Mr. Bingham is a
citizen of the the United States of America.
Item 3. Source and Amount of Funds or Other Consideration
In consideration of the Common Stock reported in Item
5(c) of this Schedule, Mr. Bingham paid to the Issuer $14,306 and
canceled the indebtedness of the Issuer for $285,694 previously
advanced. The source of both the $14,306 and the $285,694 loan
previously advanced was Mr. Bingham's personal funds, with the
bulk of those personal funds coming from his retirement plan.
Item 4. Purpose of Transaction
Mr. Bingham purchased Common Stock in the Issuer in
connection with his employment therewith as described in Item 2
of this Schedule for the purpose of giving him an equity stake in
the success of the Issuer. He has no plans to acquire control of
the Issuer.
Item 5. Interest in Securities of Issuer
(a-b) As of the close of business on February 12,
1997, Mr. Bingham may be deemed to be the beneficial owner of
605,437 shares of Common Stock. Such 605,437 shares constitute
26.4% of the shares of Common Stock outstanding (based on
2,289,887 shares of Common Stock outstanding). The 605,437
shares do not include 600,000 shares subject to stock options
that are not currently exercisable and do not become exercisable
within 60 days. Mr. Bingham has sole power to vote, direct the
vote, dispose of or direct the disposition of such shares.
(c) On February 12, 1997, Mr. Bingham purchased in a
private transaction 600,000 shares of Common Stock. The purchase
price for such shares was $.50 per share, representing an
aggregate purchase price of $300,000. The purchase price was
paid to the Issuer by cancellation of the indebtedness of the
Issuer to Mr. Bingham for $285,694 previously advanced plus an
additional payment of $14,306.
<APGE>
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to
Securities of the Issuer
As of September 1, 1996, the Company executed an Employment
and Stock Purchase Agreement with Arthur F. Bingham (the
"Agreement") in connection with his employment by the Issuer as
Senior Executive Vice President of Sales and Marketing. On
October 10, 1996, Mr. Bingham loaned the Company $285,694 at
terms included in an addendum to the Agreement. On February 12,
1997, the Company issued to Mr. Bingham 600,000 shares of Common
Stock as repayment of that loan and for his additional investment
of $14,306. On February 10, 1997, Mr. Bingham and the Issuer
entered into the following:
(i) an Incentive Stock Option Agreement whereby Mr.
Bingham received three incentive stock options, each to
purchase 150,000 shares of Common Stock, but each with
its own exercise price ranging from $.50 to $1.30 per share.
Upon the achievement of certain performance conditions,
such incentive stock options become exercisable in full on
September 1, 1998, 1999 and 2000, respectively;
and
(ii) a Nonqualified Stock Option Agreement whereby Mr.
Bingham received subject to shareholder approval a
nonqualified stock option to purchase 150,000
shares of Common Stock at an exercise price of
$1.30 per share.
Item 7. Material to be Filed as Exhibits
1. Employment and Stock Purchase Agreement dated
September 1, 1996 by and between Wellington Hall, Limited and
Arthur F. Bingham filed as Exhibit 10.17 to the Issuer's
Quarterly Report on Form 10-QSB for the quarterly period ended
July 31, 1996.*
2. Addenda to Employment and Stock Purchase Agreement
dated February 10, 1997 by and between Wellington Hall, Limited
and Arthur F. Bingham.
3. Incentive Stock Option Agreement dated February 10,
1997 by and between Wellington Hall, Limited and Arthur F.
Bingham.
4. Nonqualified Stock Option Agreement dated February
10, 1997 by and between Wellington Hall, Limited and Arthur F.
Bingham.
*Incorporated be reference to the statement or report indicated
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
February 14, 1997 /s/ Arthur F. Bingham
Date Signature
Arthur F. Bingham
Name
<PAGE>
Exhibit 2
ADDENDA TO EMPLOYMENT AND STOCK PURCHASE AGREEMENT
BETWEEN WELLINGTON HALL LIMITED AND ARTHUR F. BINGHAM
DATED September 1, 1996 (THE "AGREEMENT")
The parties to the Agreement do hereby amend the Agreement
as hereinafter set forth effective this 10th day of February,
1997:
Paragraph 13 shall be stricken in its entirety and in lieu
thereof substitute the following:
"13. Stock Purchase Agreement. Company intends to
file a registration statement pursuant to the Securities Act
of 1933, as amended, whereby Company would offer to
shareholders the nontransferable right to purchase one share
of Common Stock of Company at Fifty Cents (50 cent) per share
for each share held as of a record date established by
Company and offer any remaining shares first to shareholders
desiring to purchase more shares than their rights would
entitle them to purchase and then to the public. Prior to
the filing of such registration statement and subject to the
grant of options pursuant to paragraph 14 hereof and the
execution and delivery by Bingham of the letter in the form
attached hereto as Attachment A, Company agrees to sell and
Bingham agrees to purchase six hundred thousand (600,000)
shares of common stock of Company at Fifty Cents (50 cent) per
share. Bingham shall not be entitled to purchase any shares
in the registered offering to shareholders and the public.
On October 10, 1996, Bingham advanced to the Company
$285,694. Upon the purchase and sale of the 600,000 shares
by Bingham, Bingham shall deliver $14,306 in cash and the
debt of the Company for the amount previously advanced shall
be extinguished in full payment of the $300,000 purchase
price for such shares. If the shares are not purchased by
November 30, 1998, the amount advanced shall be repaid in
full. Upon the purchase and sale of the 600,000 shares or
repayment of the amount advanced, the Company shall pay
Bingham interest on the amount advanced, at the applicable
federal rate under Section 1274(d) of the Internal Revenue
Code of 1986, as amended, from the date of such advance to
the date of purchase and sale or the date of repayment as
the case may be."
In addition to the above, paragraph 14 of the Agreement
shall be stricken in its entirety and in lieu thereof substitute
the following:
"14. Stock Options. Company has adopted a 1997
Stock Option and Restricted Stock Plan (the "Plan") and the
Stock Compensation Committee that administers the Plan has
agreed to grant to Bingham, prior to the filing of the
filing of the registration statement and the purchase and
sale of the 600,000 shares to Bingham pursuant to Paragraph
13 hereof, the following options pursuant to the Plan: (i)
an option to purchase
<PAGE>
150,000 shares of Common Stock, which
option shall not qualify as an Incentive Stock Option as
defined in the Plan and shall be on the terms and conditions
substantially as set forth in the form of agreement attached
hereto as Attachment B and (ii) options to purchase an
aggregate of 450,000 shares at the prices and subject to the
other terms and conditions substantially as set forth in the
form of agreement attached hereto as Attachment C, which
options are intended to qualify as Incentive Stock Options
under the Plan."
Except as herein modified the Agreement and each and every
part thereof is hereby ratified and reaffirmed.
IN WITNESS WHEREOF, the parties hereto have hereunto signed
their names, and the Company has caused its name to be signed
hereto by its President and attested by its Secretary and its
corporate seal to be affixed, and the undersigned individual
herewith expressly adopts as his seal the word "SEAL" appearing
beside his signature below, all of which was done as of the date
first written above.
WELLINGTON HALL LIMITED
Attested: By: /s/ Hoyt M. Hackney, Jr.
Hoyt M. Hackney, Jr., President
/s/ W.W. Woodruff
Secretary
(CORPORATE SEAL)
/s/ Arthur F. Bingham (SEAL)
Arthur F. Bingham
<PAGE>
Exhibit 3
WELLINGTON HALL, LIMITED
1997 STOCK OPTION AND RESTRICTED STOCK PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Option
Agreement") is made and entered into as of February 10, 1997, by
and between Wellington Hall, Limited, a North Carolina
corporation (the "Company"), and Arthur F. Bingham, a key
employee of the Company (the "Optionee"):
W I T N E S S E T H:
WHEREAS, the Company desires to provide the Optionee with an
incentive to remain in the employment of the Company and an
opportunity to purchase common stock of the Company, so that the
Optionee may acquire or increase a proprietary interest in the
Company's success, and
WHEREAS, the Company desires to grant the Optionee incentive
stock options under Article II of the Company's 1997 Stock Option
and Restricted Stock Plan (the "Plan"), and the Optionee desires
to accept such options in accordance with the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, and intending to be legally
bound hereby, the parties agree as follows:
1. Grant of Options; Exercise Price and Number of Shares;
Expiration Dates. The Company hereby grants to the Optionee the
following options to purchase shares of common stock of the
Company upon the terms and conditions set forth in this
Agreement. Each of the following options is intended to be an
"Incentive Stock Option" within the meaning specified in the Plan
and as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") and is hereby designated as such
pursuant to Article II, Section 1(a) of the Plan. The grant of
the options has been duly authorized by the Committee that
administers the Plan, as established by the Board of Directors
of the Company pursuant to Article I, Section 3 of the Plan (the
"Committee").
(a) Series A Option. Subject to the terms and
conditions of this Agreement and the Plan, the Company
hereby grants to the Optionee an option (the "Series A
Option") to purchase all or any portion of One Hundred Fifty
Thousand (150,000) shares of the Company's Common Stock at
an exercise price of Fifty Cents ($0.50) per
<PAGE>
Share (the "Series A Exercise Price"). The Optionee shall be
entitled to exercise the Series A Option beginning
September 1, 1998 up to and including February 9, 2004,
if the Commissioned Retail Sales in the Territory (as defined
below) from May 1, 1997 through April 30, 1998 equal or exceed
$2,500,000. For purposes of this Section 1, "Commissioned
Retail Sales in the Territory" means the combined amount of
shipments of retail sales of the Company and Wellington Hall
Caribbean Corp. ("WHCC") in the Territory for which the Company
is obligated to pay Optionee commissions pursuant to Paragraph
4(a) of that certain Employment and Stock Purchase Agreement
dated September 1, 1996 by and between the Company and
Optionee, with "Territory" meaning the area defined in
Schedule B to such agreement.
(b) Series B Option. Subject to the terms and
conditions of this Agreement and the Plan, the Company
hereby grants to the Optionee an option (the "Series B
Option") to purchase all or any portion of One Hundred Fifty
Thousand (150,000) shares of the Company's Common Stock at
an exercise price of Eighty Cents ($0.80) per Share (the
"Series B Exercise Price"). The Optionee shall be entitled
to exercise the Series B Option beginning September 1, 1999
up to and including February 9, 2004, if Commissioned Retail
Sales in the Territory from May 1, 1998 through April 30,
1999 equal or exceed $2,700,000.
(c) Series C Option. Subject to the terms and
conditions of this Agreement and the Plan, the Company
hereby grants to the Optionee an option (the "Series C
Option") to purchase all or any portion of One Hundred Fifty
Thousand (150,000) shares of the Company's Common Stock at
an exercise price of One Dollar and 30/100 ($1.30) per Share
(the "Series C Exercise Price"). The Optionee shall be
entitled to exercise the Series C Option beginning September
1, 2000 up to and including February 9, 2004, if
Commissioned Retail Sales in the Territory from May 1, 1999
through April 30, 2000 equal or exceed $3,000,000.
The Series A, Series B and Series C Options are hereinafter
collectively referred to as the "Option" and the Series A, Series
B and Series C Exercise Prices are hereinafter collectively
referred to as the "Exercise Price."
2. Transfer of Option. The Option may not be sold,
pledged, assigned or transferred in any manner other than by will
or by the laws of descent or distribution, unless otherwise
agreed by the Committee.
3. Adjustments. If the shares of Common Stock of the
Company are increased, decreased, changed into or exchanged for a
different number or kind of shares or securities through merger,
consolidation, combination, exchange of shares, other
reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split in which the
<PAGE>
Company is the surviving entity, the aggregate number of Shares
subject to the Option and the Exercise Price shall be appropriately
and proportionately adjusted in the manner provided in the Plan.
4. Termination of Option. The Option hereby granted shall
terminate and be of no force or effect upon the happening of the
first to occur of the following events:
(a) expiration of three months after the date of
termination of the Optionee's employment with the Company
for any reason other than the death of the Optionee;
(b) expiration of twelve months after the death of the
Optionee while employed by the Company;
(c) occurrence of any event described in paragraph 9
hereof that causes a termination of the Option; or
(d) expiration of the Option as provided in paragraph
1 above.
Any Option that may be exercised for a period following
termination of the Optionee's employment may be exercised only to
the extent it was exercisable immediately before such termination
and in no event after the Option would expire by its terms
without regard to such termination.
5. Method of Exercise. The Option shall be exercised by
tender of payment of the Exercise Price and delivery to the
Company at its principal place of business of a written notice,
at least three business days prior to the proposed date of
exercise, which notice shall:
(a) state the election to exercise the Option, the
number of Shares with respect to which the Option is being
exercised, and the name, address, and social security number
of the person in whose name the stock certificate or
certificates for such Shares is to be registered;
(b) contain any such representations and agreements as
to Optionee's investment intent with respect to such Shares
as shall be reasonably required by the Committee pursuant
to paragraph 7; and
(c) be signed by the person entitled to exercise the
Option, and if the Option is being exercised by any person
or persons other than the Optionee, be accompanied by proof,
satisfactory to the Committee, of the right of such person
or persons to exercise the Option.
<PAGE>
Payment of the Exercise Price may be made in cash or by
certified or official bank check. Payment may also be made by
surrendering shares of the Company's Common Stock (including any
Shares received upon a prior or simultaneous exercise of the
Option) at the then fair market value of such Shares, as
determined pursuant to Section 1(b) of Article II of the Plan.
Payment may also be made by combining cash or check and shares of
such stock.
After receipt of such notice in a form satisfactory to the
Committee and the acceptance of payment, the Company shall
deliver to the Optionee a certificate or certificates
representing the Shares purchased hereunder, provided, that if
any law or regulation requires the Company to take any action
with respect to the Shares specified in such notice before the
issuance thereof, the date of delivery of such Shares shall be
extended for the period necessary to take such action.
6. Rights of a Shareholder. The Optionee shall not be
deemed for any purpose to be a shareholder of the Company with
respect to any Shares covered by the Option unless the Option
shall have been exercised and the Exercise Price paid in the
manner provided herein. No adjustment will be made for dividends
or other rights where the record date is prior to the date of
exercise and payment. Upon the exercise of the Option as
provided herein and the issuance of the certificate or
certificates evidencing the Shares covered thereby, the Optionee
shall have all the rights of a shareholder of the Company,
including the right to receive all dividends or other
distributions paid or made with respect to such shares.
7. Compliance with Securities Laws. Shares issuable
pursuant to this Option are not presently registered under
applicable federal and state securities laws. The Company may in
the future, but shall have no obligation to, undertake such
registrations or may, in lieu thereof, issue Shares hereunder
only pursuant to applicable exemptions from such registrations.
Before issuing Shares to Optionee hereunder, the Committee may
require appropriate representations from Optionee and take such
other action as the Committee may deem necessary, including but
not limited to placing restrictive legends on certificates
evidencing such shares and place stop transfer instructions in
the Company's stock transfer records, or delivering such
instructions to the Company's transfer agent, in order to assure
compliance with any such exemptions.
8. Rule 144. The Optionee acknowledges that,
notwithstanding any future registration of the Option and the
shares of Common Stock issuable upon its exercise under the
Securities Act of 1933 or under the securities laws of any state,
if, at the time of exercise of the Option, he is deemed to be an
"affiliate" of the Company as defined in Rule 144 of the
Securities and Exchange Commission, any shares purchased
thereunder will nevertheless be subject to sale only in
compliance with Rule 144 (but without any holding period), and
that the Company shall take such action as it deems necessary or
appropriate to assure such
<PAGE>
compliance, including placing restrictive legends on certificates
evidencing such shares and delivering stop transfer instructions
to the Company's transfer agent.
9. Reorganizations. If the Company shall be a party to
any merger or consolidation in which it is not the surviving
entity or pursuant to which the shareholders of the Company
exchange their common stock, or if the Company shall dissolve or
liquidate or sell all or substantially all of its assets, the
Option granted hereunder shall terminate on the effective date of
such merger, consolidation, dissolution, liquidation or sale;
provided, however, that prior to such effective date, the
Committee may, in its discretion, cause the Option to become
immediately exercisable, and may, to the extent the Option is
terminated as provided in this paragraph 9, authorize a payment
to the Optionee that approximates the economic benefit that he
would realize if the Option were exercised immediately before
such effective date, or authorize a payment in such other amount
as it deems appropriate to compensate the Optionee for the
termination of the unexercised portion of the Option, or arrange
for the granting of a substitute option to the Optionee.
This Agreement shall not affect in any way the right or
power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure,
or to merge or consolidate, or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.
10. No Right to Continued Employment. This Agreement does
not confer upon the Optionee any right to continued employment by
the Company, nor shall it interfere in any way with the right of
the Company to terminate or alter the terms of that employment.
11. Construction. This Agreement shall be construed so as
to be consistent with the Plan and the provisions of the Plan
shall be deemed to be controlling in the event that any provision
hereof should be inconsistent therewith. The Optionee hereby
acknowledges receipt of a copy of the Plan from the Company and
agrees to be bound by all of the terms and provisions of the
Plan.
Whenever the word "Optionee" is used in any provision of
this Agreement under circumstances where the provision should
logically be construed to apply to (i) the estate, personal
representative, or beneficiary to whom this Option may be
transferred by will or by the laws of descent and distribution or
(ii) the guardian or legal representative of the Optionee acting
pursuant to a valid power of attorney or the decree of a court of
competent jurisdiction, then the term "Optionee" shall be
construed to include such estate, personal representative,
beneficiary, guardian or legal representative.
<PAGE>
12. Severability. The provisions of this Agreement shall
be severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the
other provisions hereto.
13. Successor and Assigns. The terms of this Agreement
shall be binding upon and shall enure to the benefit of any
successors or assigns of the Company and of the Optionee.
14. Notices. Notices under this Agreement shall be in
writing and shall be deemed to have been duly given (i) when
personally delivered, (ii) when forwarded by Federal Express,
Airborne, or another private carrier which maintains records
showing delivery information, (iii) when sent via facsimile but
only if a written facsimile acknowledgment of receipt is received
by the sending party, or (iv) when placed in the United States
Mail and forwarded by registered or certified mail, return
receipt requested, postage prepaid, addressed to the party to
whom such notice is being given or such other address as
furnished to the Company from time to time for this purpose.
15. Entire Agreement; Modification. This Agreement is the
entire agreement and understanding of the parties hereto with
respect to the Option granted herein and supersedes any and all
prior and contemporaneous negotiations, understandings and
agreements with regard to the Option and the matters set forth
herein, whether oral or written. No representation, inducement,
agreement, promise or understanding altering, modifying, taking
from or adding to the terms and conditions hereof shall have any
force or effect unless the same is in writing and validly
executed by the parties hereto.
16. Shareholder Approval; Relinquishment of Other Rights.
Notwithstanding anything herein to the contrary, the Option
granted hereunder shall not be effective or exercisable unless
the shareholders of the Company shall have approved the Plan
within 12 months of its adoption by the Board of Directors. By
his execution of this Agreement, the Optionee relinquishes any
and all rights and interests of the Optionee with respect to any
stock options granted or deemed to be granted pursuant to that
Employment and Stock Purchase Agreement dated September 1, 1996,
by and between Optionee and the Company.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North
Carolina.
<PAGE>
IN WITNESS WHEREOF, the Optionee has executed this Agreement
and the Company has caused this Agreement to be executed by its
duly authorized officer, effective as of the day and year first
above written.
WELLINGTON HALL, LIMITED
By: /s/ Hoyt M. Hackney Jr. /s/ Arthur F. Bingham
Optionee
Title: President & CEO
<PAGE>
Exhibit 4
WELLINGTON HALL, LIMITED
1997 STOCK OPTION AND RESTRICTED STOCK PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Option
Agreement") is made and entered into as of February 10, 1997, by
and between Wellington Hall, Limited, a North Carolina
corporation (the "Company"), and Arthur F. Bingham, a key
employee of the Company (the "Optionee"):
W I T N E S S E T H:
WHEREAS, the Company desires to provide the Optionee with an
incentive to remain in the employment of the Company and an
opportunity to purchase common stock of the Company, so that the
Optionee may acquire or increase a proprietary interest in the
Company's success, and
WHEREAS, the Company desires to grant the Optionee a
nonqualified stock option under Article II of the Company's 1997
Stock Option and Restricted Stock Plan (the "Plan"), and the
Optionee desires to accept such option in accordance with the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, and intending to be legally
bound hereby, the parties agree as follows:
1. Grant of Option. Subject to the terms and conditions
of this Agreement and the Plan, the Company hereby grants to the
Optionee an option (the "Option") to purchase all or any portion
of One Hundred Fifty Thousand (150,000) shares of the Company's
common stock, par value $.01 per share (the "Shares"), at an
exercise price of One Dollar and 30/100 ($1.30) per Share (the
"Exercise Price"). The Optionee shall be entitled to exercise
the Option for a period of seven years from the date hereof.
This Option is intended to be a "Nonqualified Stock Option"
within the meaning specified in the Plan and is hereby designated
as such pursuant to Article II, Section 1(a) of the Plan. The
grant of this Option has been duly authorized by the Committee
that administers the Plan, as established by the Board of
Directors of the Company pursuant to Article I, Section 3 of the
Plan (the "Committee").
<PAGE>
2. Transfer of Option. The Option may not be sold,
pledged, assigned or transferred in any manner other than by will
or by the laws of descent or distribution, unless otherwise
agreed by the Committee.
3. Adjustments. If the shares of common stock of the
Company are increased, decreased, changed into or exchanged for a
different number or kind of shares or securities through merger,
consolidation, combination, exchange of shares, other
reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split in which the Company
is the surviving entity, the aggregate number of Shares subject
to the Option and the Option Exercise Price shall be
appropriately and proportionately adjusted in the manner provided
in the Plan.
4. Termination of Option. The Option hereby granted shall
terminate and be of no force or effect upon the happening of the
first to occur of the following events:
(a) expiration of three months after the date of
termination of the Optionee's employment with the Company for
any reason other than the death of the Optionee;
(b) expiration of twelve months after the death of the
Optionee while employed by the Company;
(c) occurrence of any event described in paragraph 9
hereof that causes a termination of the Option; or
(d) expiration of seven years from the date of this
Agreement;
Any Option that may be exercised for a period following
termination of the Optionee's employment may be exercised only to
the extent it was exercisable immediately before such termination
and in no event after the Option would expire by its terms
without regard to such termination.
5. Method of Exercise. The Option shall be exercised by
tender of payment of the Exercise Price and delivery to the
Company at its principal place of business of a written notice,
at least three business days prior to the proposed date of
exercise, which notice shall:
(a) state the election to exercise the Option, the
number of Shares with respect to which the Option is being
exercised, and the name, address, and social security number
of the person in whose name the stock certificate or
certificates for such Shares is to be registered;
(b) contain any such representations and agreements as
to Optionee's investment intent with respect to such Shares
as shall be reasonably required by the Committee; and
<PAGE>
(c) be signed by the person entitled to exercise the
Option, and if the Option is being exercised by any person or
persons other than the Optionee, be accompanied by proof,
satisfactory to the Committee, of the right of such person or
persons to exercise the Option.
Payment of the Exercise Price may be made in cash or by
certified or official bank check. Payment may also be made by
surrendering shares of the Company's common stock (including any
Shares received upon a prior or simultaneous exercise of the
Option) at the then fair market value of such Shares, as
determined pursuant to Section 1(b) of Article II of the Plan.
Payment may also be made by combining cash or check and shares of
such stock.
After receipt of such notice in a form satisfactory to the
Committee and the acceptance of payment, the Company shall
deliver to the Optionee a certificate or certificates
representing the Shares purchased hereunder, provided, that if
any law or regulation requires the Company to take any action
with respect to the Shares specified in such notice before the
issuance thereof, the date of delivery of such Shares shall be
extended for the period necessary to take such action.
6. Rights of a Shareholder. The Optionee shall not be
deemed for any purpose to be a shareholder of the Company with
respect to any Shares covered by this Option unless this Option
shall have been exercised and the Exercise Price paid in the
manner provided herein. No adjustment will be made for dividends
or other rights where the record date is prior to the date of
exercise and payment. Upon the exercise of the Option as
provided herein and the issuance of the certificate or
certificates evidencing the Shares covered thereby, the Optionee
shall have all the rights of a shareholder of the Company,
including the right to receive all dividends or other
distributions paid or made with respect to such shares.
7. Compliance with Securities Laws. Shares issuable
pursuant to this Option are not presently registered under
applicable federal and state securities laws. The Company may in
the future, but shall have no obligation to, undertake such
registrations or may, in lieu thereof, issue Shares hereunder
only pursuant to applicable exemptions from such registrations.
Before issuing Shares to Optionee hereunder, the Committee may
require appropriate representations from Optionee and take such
other action as the Committee may deem necessary, including but
not limited to placing restrictive legends on certificates
evidencing such shares and place stop transfer instructions in
the Company's stock transfer records, or delivering such
instructions to the Company's transfer agent, in order to assure
compliance with any such exemptions.
8. Rule 144. The Optionee acknowledges that,
notwithstanding any future registration of the Option and the
shares of Common Stock issuable upon its exercise under the
Securities Act of 1933 or under the securities laws of any state,
if, at the time of exercise of the Option, he is deemed to be an
"affiliate" of the Company as defined in Rule 144 of the
Securities and Exchange Commission, any shares purchased
thereunder will nevertheless be subject to sale only
<PAGE>
in compliance with Rule 144 (but without any holding period), and
that the Company shall take such action as it deems necessary or
appropriate to assure such compliance, including placing
restrictive legends on certificates evidencing such shares and
delivering stop transfer instructions to the Company's transfer
agent.
9. Reorganizations. If the Company shall be a party to
any merger or consolidation in which it is not the surviving
entity or pursuant to which the shareholders of the Company
exchange their common stock, or if the Company shall dissolve or
liquidate or sell all or substantially all of its assets, the
Option granted hereunder shall terminate on the effective date of
such merger, consolidation, dissolution, liquidation or sale;
provided, however, that prior to such effective date, the
Committee may, in its discretion, cause the Option to become
immediately exercisable, and may, to the extent the Option is
terminated as provided in this paragraph 9, authorize a payment
to the Optionee that approximates the economic benefit that he
would realize if the Option were exercised immediately before
such effective date, or authorize a payment in such other amount
as it deems appropriate to compensate the Optionee for the
termination of the unexercised portion of the Option, or arrange
for the granting of a substitute option to the Optionee.
This Agreement shall not affect in any way the right or power
of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure,
or to merge or consolidate, or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.
10. Tax Matters. The Optionee acknowledges that, upon
exercise of the Option, the Optionee will recognize taxable
income generally in an amount equal to the difference between the
fair market value of the purchased Shares and the Exercise Price
paid therefor, and the Company will have certain withholding
obligations for income and other taxes. It shall be a condition
to the Optionee's receipt of a stock certificate covering Shares
purchased pursuant to the Option that the Optionee pay to the
Company such amounts as it is required to withhold or, with the
consent of the Company, that the Optionee otherwise provide for
the discharge of the Company's withholding obligation. If any
such payment is not made by the Optionee, the Company may deduct
the amounts required to be withheld from payments of any kind to
which the Employee would otherwise be entitled from the Company.
11. No Right to Continued Employment. This Agreement does
not confer upon the Optionee any right to continued employment by
the Company, nor shall it interfere in any way with the right of
the Company to terminate or alter the terms of that employment.
12. Construction. This Agreement shall be construed so as
to be consistent with the Plan and the provisions of the Plan
shall be deemed to be controlling in the event that any provision
hereof should be inconsistent therewith. The Optionee hereby
acknowledges receipt of
<PAGE>
a copy of the Plan from the Company and agrees to be bound by all
of the terms and provisions of the Plan.
Whenever the word "Optionee" is used in any provision of this
Agreement under circumstances where the provision should
logically be construed to apply to (i) the estate, personal
representative, or beneficiary to whom this Option may be
transferred by will or by the laws of descent and distribution or
(ii) the guardian or legal representative of the Optionee acting
pursuant to a valid power of attorney or the decree of a court of
competent jurisdiction, then the term "Optionee" shall be
construed to include such estate, personal representative,
beneficiary, guardian or legal representative.
13. Severability. The provisions of this Agreement shall be
severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other
provisions hereto.
14. Successor and Assigns. The terms of this Agreement
shall be binding upon and shall enure to the benefit of any
successors or assigns of the Company and of the Optionee.
15. Notices. Notices under this Agreement shall be in
writing and shall be deemed to have been duly given (i) when
personally delivered, (ii) when forwarded by Federal Express,
Airborne, or another private carrier which maintains records
showing delivery information, (iii) when sent via facsimile but
only if a written facsimile acknowledgment of receipt is received
by the sending party, or (iv) when placed in the United States
Mail and forwarded by registered or certified mail, return
receipt requested, postage prepaid, addressed to the party to
whom such notice is being given or such other address as
furnished to the Company from time to time for this purpose.
16. Entire Agreement; Modification. This Agreement is the
entire agreement and understanding of the parties hereto with
respect to the Option granted herein and supersedes any and all
prior and contemporaneous negotiations, understandings and
agreements with regard to the Option and the matters set forth
herein, whether oral or written. No representation, inducement,
agreement, promise or understanding altering, modifying, taking
from or adding to the terms and conditions hereof shall have any
force or effect unless the same is in writing and validly
executed by the parties hereto.
17. Shareholder Approval; Relinquishment of Other Rights.
Notwithstanding anything herein to the contrary, the Option
granted hereunder shall not be effective or exercisable unless
the shareholders of the Company shall have approved the Plan
within 12 months before or after its adoption by the Board of
Directors. By his execution of this Agreement, the Optionee
relinquishes any and all rights and interests of the Optionee
with respect to any stock options granted or deemed to be granted
pursuant to that Employment and Stock Purchase Agreement dated
September 1, 1996, by and between Optionee and the Company.
<PAGE>
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North
Carolina.
IN WITNESS WHEREOF, the Optionee has executed this Agreement
and the Company has caused this Agreement to be executed by its
duly authorized officer, effective as of the day and year first
above written.
WELLINGTON HALL, LIMITED
By: /s/Hoyt M. Hackney, Jr. /s/Arthur F. Bingham
Optionee
Title: President & CEO
<PAGE>
