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Exhibit No. 10.17
EMPLOYMENT AND STOCK PURCHASE AGREEMENT
THIS EMPLOYMENT AND STOCK PURCHASE AGREEMENT ("Agreement"), made
effective September 1, 1996, by and between Wellington Hall, Limited a North
Carolina corporation ("Company"), and Arthur F. Bingham of Davidson County,
North Carolina ("Bingham");
WITNESSETH:
WHEREAS, the Company is engaged in the business of manufacturing,
buying, finishing and selling furniture and related products and in all
activities incidental thereto; and
WHEREAS, in addition to the Company business located North of
Lexington, North Carolina, on Interstate 85, the Company owns a business
operation in San Pedro Sula, Honduras, through its wholly owned subsidiary,
Wellington Hall Caribbean Corp; and
WHEREAS, it is the need of additional capital for various uses
including reduction of outstanding debt and capital expenditures; and
WHEREAS, the shares of the Company in accordance with the information
furnished by MacDaniel, Lewis and Co., a market maker in the Company's common
stock, the high and low quotes for the last several months have been
approximately forty-four cents ($.44) and thirty-two cents ($.32) respectively;
and
WHEREAS, the Company desires to employ and obtain the unique
experience, ability and services of Bingham who has had many years of
experience in sales marketing and product development for a major furniture
manufacturer; and
WHEREAS, Bingham desires to become affiliated with the Company and to
make an investment in common shares of the Company in the amount of Three
Hundred Thousand Dollars ($300,000.00); and
WHEREAS, the Company desires to employ Bingham as Senior Executive
Vice President of Sales and Marketing and Bingham desires to accept said
employment and make the investment as hereinabove outlined under the terms and
conditions hereinafter set forth; and
WHEREAS, the terms and conditions of this Agreement were duly
reviewed, approved and authorized by Company's Board of Directors at its
meeting held on the 31st day of August, 1996.
NOW, THEREFORE, in consideration of the premises and the promises of
the parties as hereinafter set forth, the parties hereby covenant and agree as
follows:
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1. EMPLOYMENT AND DUTIES. Company hereby employs Bingham and Bingham
accepts employment as Senior Executive Vice President of Sales and Marketing
and an exclusive sales representative to perform the duties outlined in the
schedule attached hereto as Schedule "A" which is incorporated herein by
reference, along with any other duties that may be reasonably assigned to him
by the President or Board of Directors of the Company for the term of this
Agreement.
2. PERFORMANCE. During the term of this Agreement, Bingham agrees to
devote his full time and attention to such employment and to use his best
efforts in the performance of the duties customarily incident to such offices
and such other duties that may from time-to-time be assigned to him by the
Board of Directors.
3. TERM. The initial term of this Agreement shall be for a ten (10)
year period beginning as of September 1, 1996, and ending on August 31, 2006,
unless sooner terminated as provided by paragraph 17. Thereafter, the term of
this Agreement shall automatically be extended for successive one-year terms
unless and until either party shall give the other written notice of
termination at least ninety (90) days prior to the end of the current term or
any extended term.
It is contemplated that throughout his term of employment, Bingham
shall continue to occupy the position of Senior Vice President of Sales and
Marketing and shall continue to be elected as a Director of the Company. In the
event Bingham is for any reason whatsoever not continued in such posts he shall
have the right, but not the obligation, to terminate his employment under this
Agreement by giving thirty (30) days written notice of such intention to the
Company, and if such failure is not cured within said thirty (30) day period,
this contract shall terminate at the end of said thirty (30) day period and the
Company will immediately pay to Bingham severance compensation equal to one
and a half (1 1/2) times the annual compensation provided in this Agreement for
Bingham for the year in which such notice is given. If Bingham does not
terminate, then nothing herein shall be construed to limit the term of this
Agreement or Bingham's compensation hereunder.
4. COMPENSATION. In consideration of services to be rendered by
Bingham hereunder, all of which are described in Schedule "A" attached hereto
(the "Services"), which Services are acknowledged by the Company to be
valuable, unique and in its best interest, the Company agrees to pay to Bingham
and he agrees to accept the following annual compensation payable monthly:
(a) In addition to the services to be performed as described in
Scheduled "A" attached hereto, Bingham is hereby granted a
sales territory described in Schedule "B" attached hereto (the
"Territory") for which he will be paid a commission of five
percent (5%) of all sales of products of Wellington Hall
Caribbean Corp ("WHCC") and six percent (6%) commission of all
sales of products of the Company. The commission will be paid
by the 10th of the month on orders shipped the previous month.
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The above commission shall exclude what is commonly referred
to as OEM sales; i.e. wood sales, intercompany sales to
Wellington Hall Limited, component sales, or sales to other
manufacturers. Commissions will be paid on all Company
products sold to or offered to a Company dealer within the
boundaries of the Territory.
(b) As compensation for the position of Senior Executive Vice
President of Sales and Marketing, Bingham shall receive a sum
of at least Thirty Thousand Dollars ($30,000.00) annually
payable on a monthly basis with the first payment due on
September 30, 1996 (the "Annual Compensation"). In addition to
the above, an annual bonus shall be paid which will be a sum
equal to the amount which two percent (2%) of the sales in the
territory from WHCC and one percent (1%) of the sales in the
territory from the Company exceeds Thirty Thousand Dollars
($30,000.00) for each fiscal year beginning September 1, 1996,
through August 31, 1997. This bonus shall be payable within
thirty (30) days after complete of the fiscal year. In no
event shall the annual compensation be less than Thirty
Thousand Dollars ($30,000.00).
(c) In addition to the above Bingham shall receive a five percent
(5%) commission on all orders that are considered "House"
orders, and five percent (5%) commission on inventory sales
that will be used to raise capital and reduce inventory which
will be primarily out of "seconds", overruns and discontinued
items. All such commission shall be payable on the 10th of the
month on sales shipped the previous month.
5. EXPENSES. The Company recognizes that in the course of performing
his services hereunder Bingham will necessarily incur expenses in connection
with those duties. In connection with the duties of acting in the capacity of
Senior Executive Vice President of Sales and Marketing he will incur expenses
for such items as entertainment, travel, hotels, out-of-town meals, gas and any
trips required to be made to Honduras. The Company will reimburse Bingham for
all of the reasonable business expenses described above. As regards his duties
as a sales representative in the Territory, Bingham will be reimbursed for
similar reasonable business expenses up to a maximum of Fifteen Thousand
Dollars ($15,000.00) per year. Reimbursement to be made within thirty (30)
days after filing the requisite request and documentation of expenses so
incurred. In addition to the above, Company will provide a cellular telephone
for the use of Bingham with said account in the name of the Company.
The maximum of Fifteen Thousand Dollars ($15,000.00) per year as
reimbursement to Bingham as a sales representative provided above shall be
increased on an annual basis commencing September 1, 1997, by an amount in each
year in which the National Consumer Price Index, for the month of July,
published by the United States Bureau of Labor Statistics, shows a
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rise in the cost of living index for Greensboro, North Carolina, over the level
of such cost of living index in July of 1996, and such adjustments shall be
made on a cumulative basis every two (2) years.
6. TRANSPORTATION. The Company shall have no obligation to provide an
automobile for the use of Bingham; however, during the term of this Agreement
the Company shall pay to Bingham Three Hundred Fifty Dollars ($350.00) per
month payable on the 10th of the month for Bingham's use in financing,
operating, maintaining, insuring, and providing for other expense incidental to
the operation and maintenance of an automobile, which the company acknowledges
is necessary in the performance by Bingham of his duties hereunder.
7. OFFICE. In connection with his duties as Senior Executive Vice
President of Sales and Marketing, Bingham will be provided an office at the
Company's plant in Lexington, North Carolina, with the usual office
appointments.
8. ACCESS TO COMPANY RECORDS. During the term that Bingham is a
Director and Senior Executive Vice President of Sales and Marketing, he shall
have access to all records, financial and otherwise of the Company and shall be
allowed to make copies thereof for his personal use only recognizing the
fiduciary duty which he will owe to the Company pursuant to his position.
9. MOVING EXPENSES. The Company recognizes that Bingham does not live
in the immediate area of the Company and the Company agrees to pay all
reasonable moving expenses up to a maximum of Seventy-Five Hundred Dollars
($7,500.00) which Bingham incurs in moving to the area of High Point, North
Carolina.
10. GROUP INSURANCE. The Company agrees to provide for Bingham during
the term of this Agreement, suitable group medical, accident and health
insurance in reasonable amounts the same as provided for other offices employed
by the Company.
11. LIFE INSURANCE. The Company agrees to pay for a term life
insurance policy on the life of Bingham with the Company to be the beneficiary
in a policy amount of One Million Dollars ($1,000,000.00) with the annual
premium not to exceed Three Thousand Six Hundred Dollars ($3,600.00) per year.
If the term insurance premium ever exceeds Three Thousand Six Hundred Dollars
($3,600.00) per year, the amount of life insurance which can be purchased for
Three Thousand Six Hundred Dollars on the life of Bingham will be amount
purchased. For the period of time that the premiums are less than Three
Thousand Six Hundred Dollars ($3,600.00) per year, the balance, if any, will be
payable to Bingham as an additional supplement on Bingham's disability
insurance premiums in addition to any sums set forth in paragraph 12.
12. DISABILITY. Bingham shall receive full compensation for any
period of illness or incapacity during the term of this Agreement.
Notwithstanding the foregoing, the Company shall have the right to terminate
this Agreement if such illness or incapacity shall be of such a character
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as to prevent Bingham from materially performing his duties hereunder for a
period of six (6) consecutive months by giving Bingham at least thirty (30)
days written notice of the Company's intention to do so. If Bingham resumes the
performance of his duty within thirty (30 days following receipt of such notice
and materially performs such duties on a regular basis thereafter, then this
Agreement shall continue in full force and the Company's notice of intention to
terminate shall have no further effect.
The Company agrees to provide Bingham with a disability insurance
policy in an amount satisfactory to Bingham; however the obligation of the
Company shall be limited to payment of premiums not to exceed Twenty-Four
Hundred Dollars ($2,400.00) per year. Any additional amount of premium to buy
the disability insurance which Bingham desires shall be the sole obligation of
Bingham.
3. STOCK PURCHASE AGREEMENT. Company intends to file a registration
whereby Company will sell a certain number of shares at Fifty Cents ($.50) a
share with each present shareholder being given the option to purchase their
prorata number of shares. Each such shares shall also contain a warrant to
purchase one (1) additional share for each four (4) shares owned at a stated
price. Company and Bingham agree to enter into a Stock Purchase Agreement
wherein Company agrees to sell and Bingham agrees to purchase six hundred
thousand (600,000) shares of common stock of the Company at Fifth Cents ($.50)
per share. The Stock Purchase Agreement shall provide that the shares to be
sold by the Company and purchased by Bingham shall first come from unsubscribed
shares of the offering. In the event there is not six hundred thousand
(600,000) unsubscribed shares available, then Company shall issue additional
shares at Fifty Cents ($.50) a share containing identical warrants attached
thereto in order that there will be sufficient shares to fund Company's
obligation to sell hereunder and Bingham's obligation to purchase six hundred
thousand (600,000) shares of Company's common stock at Fifty Cents ($.50) per
share. Bingham shall deliver his check in the amount of Three Hundred Thousand
Dollars ($300,000.00) within sixty (60) days of the execution of this
Agreement.
14. STOCK OPTION. Company agrees to enter into an Executive Stock
Option Plan wherein Company shall grant to Bingham the option to purchase one
hundred fifty thousand (150,000) shares of common stock at Fifty Cents ($.50)
per share, one hundred fifty thousand (150,000) shares of common stock at
Eighty Cents ($.80) a share and one hundred fifty thousand (150,000) shares of
common stock at One Dollar and Thirty Cents ($1.30) per share under the
following conditions:
(a) If from May 1, 1997 until April 30, 1998 the combined
Wellington Hall Limited ("WHL") and Wellington Hall Caribbean
Corp ("WHCC") shipments of retail sales as hereinabove defined
in the Territory ("1998 Sales") are equal to or greater than
Two and a half Million Dollars ($2,500,000.00) then the first
option to purchase one hundred fifty thousand (150,000) shares
of common stock of WHL at Fifty Cents ($.50) per share will be
effective for a period of seven (7) years beginning September
1, 1998.
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(b) If from May 1, 1998, until April 30, 1999, the combined WHL
and WHCC shipments of retail sales from the Territory ("1999
Sales") for which commissions were earned are equal to or
greater than Two Million Seven Hundred Thousand Dollars
$2,700,000.00), or the second option for one hundred fifty
thousand shares (150,000) of common stock of WHL at Eighty
Cents ($.80) per share will become effective for a period of
seven (7) years beginning September 1, 1999.
(c) If from May 1, 1999,until April 30, 2000, the combined WHL and
WHCC shipments of retail sales from the Territory for which
commission were earned ("2000 Sales") are equal to or greater
than Three Million Dollars ($3,000,000.00) then the third
option for one hundred fifty thousand (150,000) shares of
common stock of WHL shall be effective as of September 1,
2000.
15. COMMISSIONS FROM HUNT TERRITORY. Any commissions that would
normally be paid in Bingham's territory (formerly Don Hunt's territory) for
orders received by Company after June 10, 1996, and shipped after August 12,
1996, will be paid to Bingham.
16. GENERAL BINGHAM BENEFITS. This Agreement is not intended and shall
not be deemed to be in lieu of any rights, benefits and privileges to which
Bingham may be entitled as an employee of the Company under any retirement
pension profit-sharing, vacation or other plan which may now be in effect or
which may hereinafter be adopted by the Company.
17. TERMINATION. The Company shall have the right to terminate this
Agreement only for cause. "For cause" for the purposes of this Agreement shall
be deemed to be only (a) willful material breach of Bingham's obligations under
this Agreement, which breach is not substantially cured by Bingham within ten
(10) business days after the Company gives written notice of the specific
alleged breach to Bingham (it being understood that Bingham's failure to
perform and discharge his duties and responsibilities hereunder as a result of
his incapacity due to physical or mental illness or injury or accident or death
shall not be deemed such a breach); (b) willful gross misconduct of Bingham in
the course of his employment that is substantially injurious to the company;
and (c) conviction in any court of a felony which results in incarceration for
more than ninety (90) consecutive days (unless such conviction is reversed in
any final appeal thereof).
18. SALE, MERGER, CONSOLIDATION OR LIQUIDATION. If the Company is
merged, liquidated, consolidated or otherwise combined with any other company
or if substantially all of the assets of the Company are acquired by any other
person or entity, or if the control of the Company shall pass to any other
person or entity not presently in control, then in that event the Employment
Agreement shall remain in full force and effect or at the option of the Company
upon the occurance of any such events described above, then the Company or its
successor may terminate this Agreement upon the payment to Bingham of an amount
equal one and a half (1 1/2) times his earnings for the last fiscal year prior
to the date of termination. For purpose of determining Bingham's earnings,
there shall be included both Bingham's commissions paid under Bingham's
territory, plus any compensation paid for Bingham's position as Senior
Executive Vice President
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of Sales and Marketing. In the event Bingham's employment is terminated, the
payment provided herein shall be made within thirty (30) days after the date of
termination.
19. NOTICES. All notices to be given by any party to this Agreement to
any other party shall be in writing and shall be given by depositing such
notice in the United States mail first-class postage prepaid, addressed as
follows:
If to Company: Chairman of the Board
Wellington Hall Limited
Post Office Box 1354
Lexington, North Carolina 27293-1354
With Copy to: Gaither S. Walser
Brinkley, Walser, McGirt,
Miller, Smith & Coles PLLC
Post Office Box 1657
Lexington, North Carolina 27293-1657
If to Bingham: Arthur F. Bingham
Post Office Box 1354
Lexington, North Carolina 27293-1354
With Copy To: Mr. James M. Gaither, Jr.
Gaither, Gorham & Crone
Suite 203
27 1st Avenue NE
Post Office Box 2507
Hickory, North Carolina 28603
20. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed according to
the laws of the State of North Carolina.
(b) This Agreement shall insure to the benefit of and be binding
upon the Company, its successors and assigns, including,
without limitation, any person, partnership, company or
corporation which may acquire substantially all of the
company's assets or business or into which the Company may be
liquidated, consolidated, merged or otherwise combined, and
shall inure to the benefit of and be binding upon Bingham, his
heirs, distributees and personal representatives.
(c) The failure of either the Company or Bingham to insist in any
one or more instances upon performance of any terms or
conditions of this Agreement shall not
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be construed to be a waiver of future performance of any such
term, covenant or condition and the obligations of the
respective parties hereto shall continue in full force and
effect.
(d) This Agreement constitutes the full and complete understanding
and agreement between the Company and Bingham as to the
subject matter hereof and supersedes all prior understandings
and agreements and cannot be amended, modified or supplemented
in any respect except by subsequent written agreement of the
Company and Bingham.
(e) Headings in this Agreement are for convenience only and shall
not be used to interpret or construe its provisions.
(f) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall be one and the same instrument.
(g) Annual compensation payable under this Agreement shall cease
upon Bingham's death; however, any deferred compensation
arrangements which may be payable to Bingham under this
Agreement or any other plan, along with any stock options
which have been earned pursuant to this Agreement and the
Stock Options Agreement to be entered into by Company and
Bingham shall remain in full force and effect and be payable
in accordance with their terms.
(h) Death, illness, incapacity or disability of Bingham during the
term hereof shall not constitute a breach of this Agreement by
Bingham.
IN WITNESS WHEREOF, the parties hereto have herunto 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 day and
year first above written.
WELLINGTON HALL LIMITED
By:/s/ Hoyt M. Hackney, Jr.
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President
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ATTEST:
/s/ William W. Woodruff
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Secretary
[SEAL] /s/ Arthur F. Bingham (SEAL)
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Arthur F. Bingham
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SCHEDULE "A"
DUTIES OF BINGHAM
JOB TITLE: SENIOR EXECUTIVE VICE PRESIDENT OF SALES AND MARKETING
PURPOSE: TO ADMINISTER A NATIONAL SALES AND MARKETING PROGRAM THAT ASSURES
CONTINUING GROWTH IN THE COMPANY'S PROFITABLE SALES.
DUTIES:
DEVELOP AND EXECUTE AN ANNUAL SALES AND MARKETING BUDGET THAT COVERS
ALL SALES TERRITORIES, DEMONSTRATES A GROWTH IN SALES, AND CONTROLS COSTS.
DEVELOP AND MAINTAIN A PRODUCT STRATEGY THAT MEETS THE COMPANY'S
PRODUCTION NEEDS AND CAPABILITIES. DIRECT THE PRODUCT DESIGN DEVELOPMENT AND
SAMPLING OF NEW PRODUCTS.
DIRECT ALL ACTIVITIES RELATIVE TO THE PREPARATION AND EXECUTION OF THE
COMPANY'S TWO SEMI-ANNUAL FURNITURE MARKETS. MAINTAIN THE COMPANY'S HIGH POINT
SHOWROOM. DEVELOP AND DIRECT FURNITURE DISPLAY AND SHOWROOM INTERIOR DESIGN.
DEVELOP AND MAINTAIN THE COMPANY'S SUPPLY OF SALES AIDS. PROGRAM AND
DIRECT PHOTOGRAPHY, LAYOUT, AND PRINTING REQUIREMENTS. MAINTAIN AN INVENTORY OF
ALL MATERIALS INCLUDING TRANSPARENCIES AND NEGATIVES, FOR REPRODUCTION PURPOSES
AND FOR DEALER ADVERTISING.
MANAGE AND DIRECT THE COMPANY'S SALES TERRITORIES AND SALES
REPRESENTATIVES, INCLUDING THE NECESSARY SUPPORT TO DEVELOPING NEW DISTRIBUTION
AND A GROWTH IN THE SALES VOLUME FOR EACH GEOGRAPHICAL AREA, INCLUDING THE
RESTRUCTURING OF THE TERRITORIES AND REPRESENTATION AS NECESSARY.
MANAGE DEALER RELATIONS, INCLUDING PROMOTIONS, INCENTIVES, TRAINING,
CONTESTS, ADVERTISING ARRANGEMENTS AND SPECIAL FREIGHT ARRANGEMENTS.
DEVELOP AND MAINTAIN ANY NATION ADVERTISING CAMPAIGN, INCLUDING THE
COMPANY'S HOME PAGE ON THE INTERNET AND RESPONSES TO E-MAIL REQUEST.
ANY AND ALL OTHER ACTIVITIES RELATIVE TO THE COMPANY'S SALES AND
MARKETING ACTIVITIES OR NEEDS.
JOB TITLE: SALES REPRESENTATIVE IN TERRITORY DESCRIBED ON SCHEDULE "B".
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SCHEDULE "B"
BINGHAM'S EXCLUSIVE TERRITORY
THIS TERRITORY, HEREAFTER REFERRED TO AS THE "NORTH CAROLINA
TERRITORY" IS DEFINED AS AND/OR INCLUDES THE ENTIRE STATES OF NORTH CAROLINA
AND SOUTH CAROLINA. ALSO INCLUDED IS THE STATE OF VIRGINIA EXCLUDING THE
ARLINGTON AND ALEXANDRIA AREA. THE EXCLUDED AREA IS BOARDED ON THE NORTHWEST BY
A LINE FROM MANASSAS, VIRGINIA TO ASHBURN, VIRGINIA AND ON THE SOUTHWEST BY A
LINE FROM MANASSAS, VIRGINIA TO QUANTICO, MARYLAND. BINGHAM WILL SOLICIT ORDERS
ONLY FOR COMPANY'S PRODUCTS.
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