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EXHIBIT 10(w)
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 Xxxxxx X. Xxxxxxx, 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").
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.
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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
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(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 in compliance with Rule 144 (but without any holding
period), and that the Company shall take such
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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
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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
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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.
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/ Xxxx X. Xxxxxxx, Xx. /s/ Xxxxxx X. Xxxxxxx
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Optionee
Title: President & CEO
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