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EXHIBIT 10(v)
WELLINGTON HALL LTD.
1997 STOCK OPTION AND RESTRICTED STOCK PLAN
ARTICLE I
GENERAL PROVISIONS
1. Purpose. This 1997 Stock Option and Restricted Stock Plan (the
"Plan") of Wellington Hall Ltd., a North Carolina corporation (the "Company"),
is intended to induce those persons who are in a position to contribute
materially to the success of the Company to remain with the Company, to offer
them rewards in recognition of their contributions to the Company and to offer
them incentives to continue to promote the Company's best interests.
2. Elements of the Plan. The Plan provides for the grant of stock
options pursuant to Article II of the Plan ("Options") and restricted stock
awards pursuant to Article III of the Plan ("Restricted Stock Awards"). Each
Option granted pursuant to the Plan shall be designated as provided in Article
II as either an Incentive Stock Option or a Nonqualified Stock Option.
Incentive Stock Options granted under the Plan are intended to qualify as such
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and shall be construed and interpreted to comply with the requirements
of that section and any regulations promulgated thereunder.
3. Administration. The Plan shall be administered by an option
committee (the "Committee") appointed by the Board of Directors of the Company
(the "Board"). The Committee shall be comprised of at least two members of the
Board, none of whom shall be a current employee of the Company, a former
employee of the Company that receives compensation for prior services rendered
during the taxable year, or an individual receiving direct or indirect
remuneration from the Company in any capacity other than as a director. The
Board from time to time may appoint members of the Committee in substitution
for or in addition to members previously appointed, and may fill vacancies in
the Committee, however caused. Any action by the Committee shall be taken by
majority vote at a meeting thereof called in accordance with procedures adopted
thereby, or by unanimous written consent of the Committee. No member of the
Board of Directors of the Company or of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option or Restricted Stock Award granted thereunder. In addition, directors or
former directors of the Company, including members or former members of the
Committee, shall be entitled to indemnification by the Company to the extent
permitted by applicable law and by the Company's Article of Incorporation or
Bylaws with respect to any liability or expense arising out of such person's
participation in the administration of this Plan.
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4. Authority of Committee.
(a) Subject to the other provisions of this Plan, the
Committee shall have sole authority in its absolute discretion: to grant
Options and Restricted Stock Awards under the Plan; to determine the number of
shares subject to any Option or Restricted Stock Award under the Plan; to fix
the option price and the duration of each Option; to establish corporate or
individual performance or other vesting standards for Options or Restricted
Stock Awards; to establish any other terms and conditions of Options and
Restricted Stock Awards; and to accelerate the time at which any outstanding
Option may be exercised or the time when restrictions and conditions on
Restricted Stock Awards will lapse.
(b) Subject to the other provisions of this Plan, and with a
view to effecting its purpose, the Committee shall have sole authority in its
absolute discretion: to construe and interpret the Plan; to prescribe, amend,
and rescind rules and regulations relating to the Plan; to make any other
determinations relating to the Plan; and to do everything necessary or
advisable to administer the Plan.
(c) All decisions, determinations, and interpretations made
by the Committee shall be binding and conclusive on all optionees and holders
of Restricted Stock and on their legal representatives, heirs and
beneficiaries.
5. Shares Subject to the Plan; Reservation of Shares. The maximum
aggregate number of shares of common stock of the Company available pursuant to
the Plan for the grant of Options and for Restricted Stock Awards, subject to
adjustments as provided in Section 7 of this Article I, shall be 1,200,000
shares of the Company's common stock, no par value (the "Common Stock"). The
total number of shares that may be issued to any one Optionee pursuant to
options granted under the Plan shall not exceed an aggregate of 600,000 shares
of Common Stock. If any Option granted pursuant to the Plan expires or
terminates for any reason before it has been exercised in full, the unpurchased
shares subject to that Option shall again be available for the purposes of the
Plan. If any shares issued pursuant to a Restricted Stock Award are forfeited,
they shall again be available for the purposes of the Plan. The Company shall
at all times reserve and keep available such number of shares of its Common
Stock as shall be sufficient to satisfy the requirements of the Plan.
6. Eligibility. Options and Restricted Stock Awards may be granted
under the Plan to such key employees (including statutory employees within the
meaning of Section 3121(d)(3) of the Code), officers or directors of the
Company, whether or not employees, as the Committee shall select from time to
time in its discretion. Incentive Stock Options, however, may be granted under
the Plan only to key employees of the Company who qualify for the grant of an
Incentive Stock Option under Section 422 of the Code.
7. 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
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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, an
appropriate and proportionate adjustment shall be made in the maximum number
and kind of shares as to which Options and Restricted Stock Awards may be
granted under this Plan. A corresponding adjustment changing the number or
kind of shares allocated to unexercised Options or unvested Restricted Stock
Awards that shall have been granted prior to any such change shall likewise be
made. Any such adjustment in outstanding Options shall be made without change
in the aggregate purchase price applicable to the unexercised portion of any
such Option, but with a corresponding adjustment in the price for each share
covered by the Option, and shall be made in a manner as not to constitute a
modification, within the meaning of Section 424(h) of the Code, of outstanding
Incentive Stock Options. In making any adjustment pursuant to this Section 7,
any fractional shares shall be disregarded.
In the event of a change in the Common Stock of the Company as
presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be Common Stock within the meaning of the Plan.
The grant of an Option or a Restricted Stock Award under the Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes in its capital or
business structure.
ARTICLE II
STOCK OPTIONS
Options granted pursuant to the Plan that are intended to qualify as
"incentive stock options" under Section 422 of the Code shall be designated as
such at the time of their grant and are referred to herein as Incentive Stock
Options. Options not intended to qualify as Incentive Stock Options are
referred to herein as Nonqualified Stock Options and shall be designated as
such in the applicable option agreement. Options granted hereunder shall be
subject to the terms, conditions and limitations set forth in Article I above
and to the following:
1. Terms and Conditions of Options. Options granted under the Plan
shall be evidenced by written agreements ("option agreements") in such form as
the Committee may from time to time approve. The terms and conditions of
Options granted under the Plan, including the satisfaction of corporate or
individual performance or other vesting standards, may differ one from another
as the Committee shall in its discretion determine, as long as all Options
granted under the Plan satisfy the following terms and conditions:
(a) Number of Shares; Designation. Each Option shall state
the number of shares of Common Stock to which it pertains and that it is either
an Incentive Stock Option or a Nonqualified Stock Option.
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(b) Option Price. Each Option shall state the option price,
which shall not be less than the fair market value (as hereinafter defined) per
share of the Common Stock at the time the option is granted (except that for
Incentive Stock Options granted to any employee who owns more than 10% of the
combined voting power of all classes of stock of the Company, the option price
shall not be less than 110% of fair market value). For the purpose of the Plan,
the "fair market value" per share of Common Stock on any date of reference
shall be the Closing Price of the Common Stock referred to in clauses (i), (ii)
or (iii) below, whichever appropriate, on the business day immediately
preceding such date. For this purpose, the Closing Price of the Common Stock
on any business day shall be: (i) if the Common Stock is listed or admitted for
trading on any United States national securities exchange, or if actual
transactions are otherwise reported on a consolidated transaction reporting
system, the last reported sale price of Common Stock on such exchange or
reporting system, as reported in any newspaper of general circulation; (ii) if
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the mean
between the closing high bid and low asked quotations for the Common Stock on
such system for such day; or (iii) if neither clause (i) or (ii) is applicable,
the mean between the high bid and low asked quotations for the Common Stock as
reported by the National Quotation Bureau, Incorporated if at least two
securities dealers have inserted both bid and asked quotations for Common Stock
on at least five of the preceding ten days. If neither clause (i) nor clauses
(ii) or (iii) are applicable, "fair market value" per share of Common Stock
shall be such value as shall be determined by the Committee in its sole
discretion, unless the Committee shall identify a different method for
determining fair market value in a fair and uniform manner.
(c) Exercise of Options. Each Option shall be exercisable in
one or more installments during its term, as provided in the applicable Stock
Option agreement, and the right to exercise may be cumulative. No Option may
be exercised for a fraction of a share of Common Stock. Unless otherwise
provided in the option agreement, the purchase price of any shares purchased
shall be paid in full in cash or by certified or official bank check payable to
the order of the Company or, if permitted by the applicable option agreement,
by shares of Common Stock, or by a combination of cash, check, and (if
permitted) shares of Common Stock. If any portion of the purchase price is
paid in shares of Common Stock, those shares shall be valued at their fair
market value as of the day of delivery, as determined in accordance with
Section 1(b) of this Article II. No optionee, or optionee's executor,
administrator, legatee, or distributee, shall be deemed to be a holder of any
shares subject to an option unless and until a stock certificate or
certificates for such are issued to such person(s) under the terms of the Plan.
(d) Written Notice Required. An Option granted pursuant to
the terms of this Plan shall be exercised when written notice of that exercise,
stating the number of shares with respect to which the Option is being
exercised, has been given to the Company at its principal office, from the
person entitled to exercise the Option and full payment for the shares with
respect to which the Option is exercised has been received by the Company.
(e) Options Not Transferable. Options granted pursuant to
this Plan may not be sold, pledged, assigned or transferred in any manner other
than by will or the laws of descent or distribution and may be exercised during
the lifetime of an optionee only by that optionee.
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(f) Duration of Options. Each Option and all rights
thereunder granted pursuant to the terms of this Plan shall expire on the date
specified in the applicable option agreement, but in no event shall any Option
expire later than ten (10) years from the date on which the Option is granted;
provided, however, that any Option granted to an employee who owns more than
10% of the combined voting power of all classes of stock of the Company may not
be exercisable after the date five (5) years from the date the Option is
granted. In addition, each Option shall be subject to early termination as
provided in this Plan or the applicable option agreement.
(g) Termination of Employment, Disability or Death.
(i) If an optionee ceases to be employed by the
Company, or any parent or subsidiary corporation, for any reason other than
death or disability, any Option granted to such optionee that is unexercised
shall be terminated and forfeited; provided, however, that the applicable
option agreement may allow such Option to be exercised within a period not to
exceed three months after the date of termination of employment.
(ii) If an optionee becomes disabled within the
meaning of Section 22(e)(3) of the Code while employed by the Company, or any
parent or subsidiary corporation, the Option may be exercised at any time
within three months after the date of termination of employment due to
disability.
(iii) If an optionee dies while employed by the
Company, its parent or any subsidiary corporation, his Option shall expire one
year after the date of death, unless a longer or shorter period of exercise is
provided in the applicable option agreement. During this period, the Option
may be exercised, except as otherwise provided in the applicable option
agreement, by the person or persons to whom the optionee's rights under the
Option shall pass by will or by the laws of descent and distribution, but in no
event may the Option be exercisable more than ten years from the date of grant.
(iv) Unless otherwise provided in the applicable
option 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.
(h) 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, all Options outstanding under this Plan, unless otherwise provided in
the applicable option agreement, 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, make
any or all outstanding Options immediately exercisable, and may, with respect
to Options that are terminated as provided in this Section (h), (i) authorize a
payment to any optionee that approximates the economic benefit that he would
realize if his option were exercised immediately before such effective date,
(ii) authorize a
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payment in such other amount as it deems appropriate to compensate any optionee
for the termination of his Option, or (iii) arrange for the granting of a
substitute Option to any optionee.
2. Maximum Amount of Incentive Stock Options. The maximum aggregate
fair market value of Common Stock, determined as of the time the Incentive
Stock Option is granted, with respect to which Incentive Stock Options are
exercisable by an employee for the first time during any calendar year, under
this Plan and all other incentive stock option plans of the Company and any
parent, subsidiary, and predecessor corporations, shall not exceed $100,000.
ARTICLE III
RESTRICTED STOCK AWARDS
Restricted Stock Awards granted pursuant to this Article III shall be
subject to those terms, conditions and limitations set forth in Article I above
and to the following additional terms:
1. Grant of Restricted Shares. The Committee may cause the Company to
grant Restricted Stock Awards to eligible participants in such amounts as the
Committee, in its sole discretion, shall determine. Restricted Stock Awards
may be issued either alone or in addition to Options granted under the Plan.
2. Agreement. Each Restricted Stock Award shall be evidenced by a
written agreement in such form and containing such provisions not inconsistent
with the Plan as the Committee may from time to time approve. Each Restricted
Stock Award shall be effective as of the date so stated in the resolution of
the Committee making the award.
3. Restrictions and Conditions. Shares of Common Stock awarded under
this Article III shall be subject to such restrictions and conditions, if any,
as may be imposed by the Committee at the time of making the award. Such
restrictions and conditions may include, without limitation, the satisfaction
of specified performance criteria by the Company or by the grantee of the
Restricted Stock Award, or other vesting standards; provided, however, that no
award shall require any payment of cash consideration by the grantee.
Restrictions and conditions imposed on shares of Common Stock awarded under
this Article III may differ from one award to another as the Committee shall,
in its discretion, determine. Any restrictions and conditions shall lapse, in
whole or in part, as provided in the agreement evidencing the Restricted Stock
Award, but must lapse, if at all, not later than ten (10) years from the date
of the award.
Shares with respect to which no restrictions or conditions are imposed
and shares with respect to which the restrictions and conditions imposed
thereon have lapsed are hereinafter referred to as "Unrestricted Shares."
Shares with respect to which the restrictions and conditions imposed thereon
have not lapsed are hereinafter referred to as "Restricted Shares."
4. Rights as a Shareholder. A holder of Unrestricted Shares shall
have all of the rights of a shareholder of the Company with respect thereto and
shall be entitled to receive a stock
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certificate evidencing such Unrestricted Shares. Such certificate shall be
issued without legend, except to the extent that a legend may be necessary for
compliance with applicable securities laws.
A holder of Restricted Shares shall be the record owner thereof and
shall, subject to the restrictions and conditions, have all of the rights of a
shareholder with respect thereto, including, but not limited to, the right to
receive all dividends paid on the Common Stock (ordinary or extraordinary,
whether in cash, securities or other property) and the right to vote the
Restricted Shares; provided, however, that each stock certificate evidencing
Restricted Shares shall bear a conspicuous legend stating that the shares
evidenced thereby are subject to restrictions as to transferability as provided
in Section 6 of this Article III and to such other restrictions and conditions
as have been imposed by the Committee, and each such certificate shall be
deposited by the Holder with the Company or its designee together with a stock
power endorsed in blank.
5. Forfeiture. Unless otherwise provided in the applicable Restricted
Stock Award agreement, upon termination of the grantee's employment with the
Company or any of its subsidiaries for any reason whatsoever (voluntarily or
involuntarily, with or without cause), all Restricted Shares then owned by him
shall automatically and without any action on his part be forfeited and
transferred to the Company.
6. Transferability. Restricted Shares held by a grantee shall not be
subject to alienation, sale, transfer, assignment, pledge, attachment or
encumbrances of any kind, and any attempt to alienate, sell, transfer, assign,
pledge or otherwise encumber any Restricted Shares shall be void. In addition,
the Company may impose such restrictions on the transfer of Unrestricted Shares
as it deems necessary or desirable to assure compliance with all applicable
federal and state securities laws.
7. Adjustments. If there is a change in the Common Stock of the
Company as described in Article I, Section 7 of this Plan, any stock or other
securities or other property issued with respect to Restricted Shares shall be
subject to the same restrictions and conditions as are applicable to such
Restricted Shares, and the certificates or other evidence of such stock,
securities or other property, together with an appropriate stock power or power
of attorney, shall be delivered to the Company or its designee and held until
such time as the restrictions and conditions applicable thereto lapse or until
the stock, securities or other property is forfeited in accordance with the
provisions of this Article III.
If the Company shall be a party to any merger or consolidation in
which it is not the surviving company 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 Committee may, in
its discretion, cause all Restricted Stock Awards that are still subject to any
restrictions and conditions to become immediately vested in full on the
effective date of any such transaction, unless otherwise provided in the
applicable agreement evidencing such Restricted Stock Award.
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ARTICLE IV
MISCELLANEOUS PROVISIONS
1. Tax Reimbursement Payments or Loans. In view of the federal and
state income tax savings expected to be realized by the Company upon exercise
of a Nonqualified Stock Option or the lapse of restrictions and conditions
imposed upon Restricted Shares, the Committee may, in its discretion, provide
that the Company will make a cash payment or a loan or a combination thereof to
the grantee of a Nonqualified Stock Option or the recipient of a Restricted
Stock Award (or his personal representatives or heirs) for the purpose of
assisting such optionee or grantee in the payment of personal income taxes
arising from such exercise or lapse of restrictions and conditions. The basis
for determining the amount and conditions of such cash payment or loan or
combination thereof and the terms and conditions of any such loan shall be
specified in the agreement pursuant to which the grant or award is made or may
be subsequently determined by the Committee. The Committee, in its discretion,
may from time to time forgive any such loan in whole or in part.
2. Tax Withholding. No optionee shall be entitled to issuance of a
stock certificate representing shares purchased upon exercise of a Nonqualified
Stock Option, and no grantee of a Restricted Stock Award shall be entitled to
issuance of a stock certificate evidencing Unrestricted Shares, until such
optionee or grantee has paid, or made arrangements for payment, to the Company
of an amount equal to the income and other taxes that the Company is required
to withhold from such person as a result of his exercise of a Nonqualified
Stock Option or his receipt of Unrestricted Shares. In addition, such amounts
as the Company is required to withhold by reason of any tax reimbursement
payments made pursuant to Section 1 of this Article IV may be deducted from
such payments.
3. Employment. Nothing in the Plan or in any Option or Restricted
Stock Award shall confer upon any eligible employee any right to continued
employment by the Company, or limit in any way the right of the Company at any
time to terminate or alter the terms of that employment.
4. Effective Date of Plan. This Plan shall be effective February 10,
1997, the date of adoption of the Plan by the Board of Directors of the
Company, subject to approval of the Plan by the shareholders of the Company by
the vote of the holders of not less than a majority of the Company's Common
Stock present or represented at a meeting of shareholders duly called and held
within 12 months before or after the date of adoption of the Plan by the Board.
5. Termination and Amendment of Plan. The Plan may be terminated at
any time by the Board of Directors. Unless sooner terminated, the Plan shall
terminate February 9, 2007. No Option or Restricted Stock Award shall be
granted under the Plan after the Plan is terminated. Subject to the limitation
contained in Section 7 of this Article IV, the Board of Directors may at any
time amend or revise the terms of the Plan, provided, however, that no
amendment or revision shall (a) increase the maximum aggregate number of shares
subject to this Plan, except as permitted under Section 7 of Article I; (b)
change the minimum purchase price for shares
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subject to Options granted under the Plan; (c) extend the maximum duration
established under the Plan for any Option or for a Restricted Stock Award; or
(d) permit the granting of an Option or Restricted Stock Award to anyone other
than those individuals described in Section 6 of Article I hereof.
6. Prior Rights and Obligations. No amendment, suspension, or
termination of the Plan shall, without the consent of the person who has
received an Option or Restricted Stock Award, alter or impair any of that
person's rights or obligations under any Option or Restricted Stock Award
granted under the Plan prior to such amendment, suspension, or termination.
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