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EXHIBIT 10(y)
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 Xxxxx X. Xxxxxxxx, 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 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 Three Hundred Thousand (300,000)
shares of the Company's common stock, no par value per share (the "Shares"), at
an exercise price of Fifty Cents ($0.50) per Share (the "Exercise Price"). This
Option 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 11, Section 1(a) of the Plan. The grant of the 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 1, Section 3 of the Plan
(the "Committee").
2. Term of Option. Subject to the further restrictions and provisions
of the Plan and this Agreement, the Option shall become exercisable in
installments, with the Optionee having the right to purchase from the Company
the following number of Shares subject to this Option, on and after the
following dates, in cumulative fashion:
(a) At any time after August 31, 1997 and prior to February 1,
1998, up to
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200,000 of the Shares subject to this Option;
(b) At any time after December 31, 1997 and prior to February 1, 1998,
this Option shall be exercisable in full, to the extent it has not
previously been exercised.
No fractional shares of common stock shall be issued upon any exercise of this
Option.
3. 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.
4. 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
Exercise Price shall be appropriately and proportionately adjusted in the manner
provided in the Plan.
5. 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;
(b) expiration of three months after the death of the Optionee
while employed by the Company;
(c) occurrence of any event described in paragraph 10 hereof
that causes a termination of the Option; or
(d) expiration of the term of this Option as provided in
paragraph 2 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.
6. 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:
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(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.
Payment of the Exercise Price may be made in cash or by certified or
official bank check in U.S. Dollars or in Lempiras by using the official rate of
Bancasa's Offer to Purchase Dollars as of the date of payment, not the date of
exercise. 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.
7. 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.
8. 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
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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.
9. 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 compliance, including placing restrictive legends on certificates
evidencing such shares and delivering stop transfer instructions to the
Company's transfer agent.
10. 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 10, 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.
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 a copy of the Plan from
the Company and agrees to be bound by all of the terms and provisions of the
Plan.
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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 adoption by the
Board of Directors of the Company. 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 December 1, 1996, by and between
Optionee and the Company.
18. Governing Law. This Agreement shall be governed by and construed in
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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 /s/ Xxxxx Xxxxxxxx
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Optionee
Title: President & CEO
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