OPTION AGREEMENT


      AGREEMENT dated as of the 18th day of December, 1996 (the "Agreement")
between MORGAN PRODUCTS LTD., a Delaware corporation having its principal place
of business at 469 McLaws Circle, Williamsburg, Virginia 23185 (the "Company"),
and Duane Greenly (the "Optionee").

                             W I T N E S S E T H:

      WHEREAS, the Company desires to provide the Optionee the option of
acquiring shares of the common stock, par value $.10 per share, of the Company
(the "Common Stock"); and

      WHEREAS, the Optionee desires to have the option to acquire shares of
Common Stock;

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, the parties hereto agree as follows:

      1.  Definitions.  As used herein, the following words and phrases shall
have the following meanings:

      (a)  Board:  The Board of Directors of the Company.

      (b) Change of Control shall mean the occurrence of any one or more of the
following:

                    (i) Any transaction or series of transactions which, within 
      a twelve (12) month period, constitute a change of management or control,
      which shall be deemed to have occurred whenever;

                        (1) At least thirty-five percent (35%) of the then
      outstanding shares of Common Stock of the Company are for cash, property
      (including, without limitation, stock in any corporation), or
      indebtedness, or any combination thereof redeemed by the Company or
      purchased by any person(s), firm(s) or entity(ies), or



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      exchanged for shares in any other corporation whether or not affiliated
      with the Company, or any combination of such redemption, purchase or
      exchange, or

                        (2) At least fifty-one percent (51%) of the Company's
      assets are acquired by any person(s), firm(s) or entity(ies) whether or
      not affiliated with the Company for cash, property (including without
      limitation, stock in any corporation) or indebtedness or any combination
      thereof, or

                        (3) During any period of two (2) consecutive years,
      individuals who at the beginning of such period constitute the Board (and
      any new Director, whose election by the Company's stockholders was
      approved by a vote of at least two-thirds (2/3) of the Directors then
      still in office who either were Directors at the beginning of the period
      or whose election or nomination for election was so approved), cease for
      any reason to constitute a majority thereof, or

                        (4) The Company is merged or consolidated with another
      corporation regardless of whether the Company is the survivor.

                    (ii) Any substantial equivalent of any such redemption,
      purchase, exchange, transaction or series of transactions, acquisition,
      merger or consolidation, which the Board of Directors reasonably
      determines constitutes such a change of management or control. 

                    For purposes of the foregoing definition the term "control"
      shall have the meaning ascribed thereto under the Securities Exchange Act
      of 1934, as amended, and the regulations thereunder, the term "management"
      shall mean both the Chief Executive Officer and the Chief Operating
      Officer of the Company.

      (c) Code:  The  Internal  Revenue  Code of 1986,  as amended.  


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      2. Grant of Option. The Company hereby grants to the Optionee, as of the
day and year first written above, the right, option and privilege (the "Option")
to purchase from the Company up to 90,000 shares (the "Option Shares") of Common
Stock. The Option may be exercised only in accordance with the terms and
conditions of this Agreement. 

      3. Term of Option. The term of the Option shall be until the close of
business on December 18, 2006 unless sooner terminated under the provisions of
Section 5 hereof. 

      4. Option Price. The price to be paid to the Company for each of the
Option Shares purchased pursuant to this Agreement shall be seven dollars
($7.00). 

      5. Exercise of Option.

      (a)  Exercise During Term.  The Option shall be exercisable only during
the term of the Option.

      (b) Procedure for Exercise. The Option shall be deemed to be exercised
when the Optionee (or the person authorized to exercise the Option on behalf of
the Optionee under Section 6(c) hereof) delivers to the Company at its address
as given in the Agreement and to the attention of the Secretary: 

                    (i) Written notice of such exercise, which notice shall
      identify this Agreement and shall specify the number of shares of Common
      Stock being so acquired and the per share purchase price of such Common
      Stock; and 

                    (ii) Payment for the shares of Common Stock being so 
      acquired, made in full by certified or bank cashier's check.

      (c) Vesting of Option.  Except as  otherwise  provided in Section 5(d) and
(e) hereof,  the Option shall be  exercisable  (i) to the extent of  twenty-five
percent  (50%) of the total  number of shares  covered by the Option at any time
after December 18, 1996, and (ii) to the extent of 


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seventy-five percent (75%) of the total number of shares covered by the Option
at any time after December 18, 1997, and (iii) to the extent of one hundred
percent (100%) of the total number of shares covered by the Option at any time
after December 18, 1998; provided, however, that to the extent the Option is not
exercised in any such period for the total number of shares for which it could
have been exercised, such unexercised portion of the Option shall be exercisable
during the remaining term of the Option.

      (d) Acceleration in the Event of a Change of Control. Notwithstanding
Section 5(c), in the event of a Change of Control of the Company during the term
of the Option, the Option shall, effective as of the effective time of the
Change of Control, become exercisable with respect to all unexercised shares
thereunder.

      (e) Acceleration Upon Achieving Budgeted Income Before Income Taxes.
Notwithstanding Section 5(c), provided that the Option shall have been
outstanding for at least 180 days during any fiscal year, the Option shall
become exercisable with respect to all unexercised shares thereunder upon a
determination that the Company has met 100% of the targeted business plan for
such fiscal year of the Company. The determination that the Company has met 100%
of such targeted business plan shall be based upon the Company's audited
financial statements for such fiscal year, with the date of such determination
being the date of certification of such financial statements by the independent
accountants for the Company. 

      6. Termination of Option.

      (a) Termination of Employment. If the Optionee shall cease to be an
employee of the Company for any reason other than retirement, death or permanent
and total disability (as defined in Section 22(e)(3) of the Code) and other than
after a Change of Control, the Option shall at once terminate. This Agreement
shall not confer upon the Optionee any right with 


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respect to continuation of employment by the Company, nor shall it interfere in
any way with the Optionee's right or the Company's right to terminate the
Optionee's employment.

      (b) Retirement of Optionee. In the event of the retirement of the Optionee
during the term of the Option and while in the employ of the Company and in
accordance with the Company's retirement policies, the Option may be exercised
at any time within ninety (90) days following the date of retirement to the
extent the Option could be exercised under Section 5 hereof on the date of
retirement.

      (c) Death or Disability of Optionee. In the event of the death of the
Optionee or the termination of employment of the Optionee due to permanent and
total disability (as defined above) during the term of the Option and while in
the employ of the Company, the Option may be exercised at any time within twelve
(12) months following the date of death or the termination of employment due to
such permanent and total disability, as the case may be, to the extent the
Option could be exercised under Section 5 hereof on the date of death or
termination of employment. In the case of death of the Optionee, the Option may
be exercised by the estate of the Optionee or by a person who is the Optionee's
spouse or surviving child and who acquired the right to exercise the Option by
bequest or inheritance.

      (d) Change of Control of Company. In the event the Optionee's employment
with the Company (or any successor company) is terminated after a Change of
Control, the Option shall remain exercisable for a period equal to the lesser of
(i) seven (7) calendar months after such termination of employment or (ii) the
remainder of its term.

      (e) The provisions of this Section 6 shall not operate to extend the term
of the Option as stated in Section 3 hereof.


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      7. Nontransferability of Option. The Option may not be transferred in any
manner other than by will or by the laws of descent or distribution. The
exercise of an Option so transferred shall be subject to the terms of this
Agreement. 

      8. Compliance with Securities Laws. The Optionee acknowledges, represents,
and agrees that:

      (a) The Company shall not be obligated to transfer Option Shares pursuant
to the exercise of the Option granted under this Agreement unless the exercise
of such Option and the transfer of such Option Shares shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, and the applicable state securities laws.

      (b) The Company shall be entitled to rely upon an opinion of counsel
selected by the Company as to whether any such transfer would be lawful.

      (c) All Common Stock purchased pursuant to the Option granted under this
Agreement is being purchased for investment and not with a view to the
distribution or resale thereof; and

      (d) Common Stock purchased pursuant to the Option granted under this
Agreement will not be sold, assigned, or transferred except in compliance with
applicable federal and state securities laws.

      9. Adjustment of Shares. In the event of any change in corporate
capitalization, such as a stock split, or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, or other distribution
of stock or property of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code) or any partial or complete liquidation of the Company, an adjustment shall
be made in the 


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number and class of the Option Shares, and in the number and class of and/or
price of the shares of Common Stock subject to the outstanding Option granted
under this Agreement, as may be determined to be appropriate and equitable by
the Board, in its sole discretion, to prevent dilution or enlargement of rights;
provided, however, that the number of shares subject to any Option shall always
be a whole number.

      10. Registration or Qualification of Shares. Notwithstanding anything
herein to the contrary, no Option granted hereunder may be exercised, and no
shares shall be issued with respect to the Option granted under this Agreement,
unless at the time of exercise either (A)(i) a registration statement has been
filed with the Securities and Exchange Commission which has become effective
with respect to the shares subject to the Option; (ii) appropriate registration
or qualification has been effected under applicable state securities laws; (iii)
the exercise of the Option and the issuance and delivery of such shares pursuant
thereto shall comply with all applicable provisions of law and the requirements
of any stock exchange upon which the shares may then be listed; or (B) the Board
shall have determined, based upon the advice of counsel, that an exemption from
registration shall be available with respect to the issuance of shares subject
to the Option, and the issuance and delivery of such shares pursuant thereto
shall comply with all applicable provisions of law. Any such exercise of the
Option and the issuance of shares with respect thereto shall be further subject
to the approval of counsel for the Company with respect to such compliance. 

      11. Withholding Tax. The Company may make such provisions as it may deem
appropriate for the withholding of any taxes which the Company determines it is
required to withhold in connection with the grant or exercise of the Option
granted under this Agreement or the disposition of any Common Stock acquired
pursuant to the exercise of the Option, and may authorize the Optionee to
satisfy such withholding obligations by having the Company withhold 


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the number of shares of Common Stock under the Option necessary to satisfy all
or part of the withholding liability.

      12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware

      13. Merger. This Agreement memorializes the terms of the Option authorized
to be granted to the Optionee by action of the Board on December 18, 1996 and
supersedes any other agreement, written or oral, between the parties with
respect to the subject matter hereof. 

      IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written. 

Attest: MORGAN PRODUCTS LTD.



-------------------------------------   By: /s/ Larry R. Robinette
                                            Name:  Larry R. Robinette
                                            Title:    President and CEO


-------------------------------------   /s/ Duane Greenly
                                        Name: Duane Greenly



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