Exhibit 10:28

                          COMMERCIAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
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  Principal       Loan Date      Maturity       Loan No   Call    Collateral    Account      Officer   Initials
<S>              <C>            <C>               <C>                         <C>               <C>
$1,529,784.00    06-16-1999     06-16-2000        ***                         3200548-9002      076
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</TABLE>
    References in the shaded area are for Lender's use only and do not limit
     the applicability of this document to any particular loan or item. Any
   item above containing *** has been omitted due to text length limitations.
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GRANTOR:  WELLINGTON HALL, LIMITED           LENDER: LEXINGTON STATE BANK
          425 JOHN WARD ROAD                         ONE LSB PLAZA
          LEXINGTON, NC 27292                        PO BOX 867
                                                     LEXINGTON, NC 27292
================================================================================

THIS  COMMERCIAL  SECURITY  AGREEMENT  dated June 16, 1999, is made and executed
between   Wellington  Hall,   Limited   ("Grantor")  and  Lexington  State  Bank
("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender
a security interest in the Collateral to secure the Indebtedness and agrees that
Lender  shall  have the  rights  state in this  Agreement  with  respect  to the
Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL  DESCRIPTION.  The word  "Collateral" as used in this Agreement means
the  following  described  property,  whether now owned or  hereafter  acquired,
whether now  existing or  hereafter  arising,  and  wherever  located,  in which
Grantor  is  giving  to  Lender  a  security  interest  for the  payment  of the
indebtedness  and performance of all other  obligations  under the Note and this
Agreement:

     All Inventory,  Accounts Receivable,  Equipment,  Machinery,  Furniture and
Fixtures now owned or hereafter acquired.

In addition, the word " Collateral" also includes all the following, whether now
owned or hereafter  acquired,  whether now existing or  hereafter  arising,  and
wherever located:

     (A) All accessions, attachments, accessories, replacements and additions to
     any of the collateral described herein, whether added now or later.

     (B) All  products  and  produce of any of the  property  described  in this
     Collateral section.

     (C)  All  accounts,  general  intangibles,   instruments,   rents,  monies,
     payments,  and all other  rights,  arising out of a sale,  lease,  or other
     disposition of any of the property described in this Collateral section.

     (D) All proceeds (including insurance proceeds) from the sale, destruction,
     loss  or  other  disposition  of any  of the  property  described  in  this
     collateral  section,  and sums due from a third  party who has  damaged  or
     destroyed  the  Collateral  or from that  party's  insurer,  whether due to
     judgment, settlement or other process.

     (E) All records and date relating to any of the property  described in this
     collateral  section,  whether  in  the  form  of  a  writing,   photograph,
     microfilm,microfiche,  or electronic media,  together with all of Grantor's
     right,  title and  interest  in and to all  computer  software  required to
     utilize,  create,  maintain,  and  process  any  such  record  or  data  on
     electronic media.

Despite any other provision of this Agreement,  Lender is not granted,  and will
not have, a non purchase  money  security  interest in household  goods,  to the
extent  such a  security  interest  would be  prohibited  by  applicable  la. In
addition,  if because of the type of any Property,  Lender is required to give a
notice of the right to cancel under "Truth in Lending for the Indebtedness, then
Lender will not have a security  interest in such Property unless and until such
a notice is given.

RIGHT OF SETOFF.  Grant grants to Lender a contractual security interest in, and
hereby  assigns,  conveys,  delivers,  pledges  and  transfers  to  Lender,  all
Grantor's right, title and interest in and to all Grantor's accounts with Lender
(whether checking,  savings, or some other account).  This includes all accounts
Grantor may open in the future.  However, this does not include any IRA or Keogh
accounts, or any trust accounts for which the grant of a security interest would
be prohibited by law.  Grantor  authorizes  Lender,  to the extent  permitted by
applicable law, to charge or setoff all sums owing on the  Indebtedness  against
any and all such accounts.

GRANTOR'S  REPRESENTATIONS  AND WARRANTIES WITH RESPECT TO THE COLLATERAL.  With
respect to the Collateral, Grantor represents and warrants to Lender that:

     PERFECTION  OF  SECURITY  INTEREST.  Grantor  agrees to  execute  financing
     statements  and to take  whatever  other actions are requested by Lender to
     perfect and continue  Lender's  security  interest in the Collateral.  Upon
     request  of  Lender,  Grantor  will  deliver  to Lender  and and all of the
     documents evidencing or constituting the Collateral,  and Grantor will note
     Lender's interest upon any and all chattel paper if not delivered to Lender
     for possession by Lender.  This is a continuing Security Agreement and will
     continue in effect even though all or any part of the  Indebtedness is paid
     in full  and  even  though  for a period  of time  the  Grantor  may not be
     indebted to Lender.

     NOTICE TO LENDER. Grantor will notify Lender in writing at Lender's address
     shown above (or such other  addresses as Lender may designate  from time to
     time)  prior to (1)  change in  Grantor's  name,  (2)  change in  Grantor's
     assumed  business  name(s),  (3) change in the  management of Grantor,  (4)
     change in the  authorized  signer(s),  (5)  change in  Grantor's  principal
     office  address,  (6)  conversion of Grantor to a new or different  type of
     business entity, or (7) change in any other aspect of Grantor that directly
     or indirectly  relates to any  agreements  between  Grantor and Lender.  No
     change in  Grantor's  name will take  effect  until  after  Lender has been
     notified.

     NO VIOLATION. The execution and delivery of this Agreement will not violate
     any law or Agreement  governing Grantor or to which Grantor is a party, and
     its certificate or article of Incorporation  and bylaws do not prohibit any
     term or condition of this Agreement.

     ENFORCEABILITY  OF  COLLATERAL.  To the extent the  Collateral  consists of
     accounts, chattel paper, or general intangibles,  as defined by the Uniform
     Commercial  Code,  the  collateral is  enforceable  in accordance  with its
     terms,  is  genuine,  and  fully  complies  with  all  applicable  laws and
     regulations   concerning  form,  content  and  manner  of  preparation  and
     execution, and all persons appearing to be obligated on the Collateral have
     authority and capacity to contract and are in fact obligated as they appear
     to be on the Collateral. There shall be no setoffs or counterclaims against
     any of the  Collateral,  and no agreement  shall have been made under which
     any deductions or discounts may be claimed concerning the Collateral except
     those disclosed to Lender in writing.

     LOCATION  OF  COLLATERAL.  Except  in  the  ordinary  course  of  Grantor's
     business,  Grantor agrees to keep the Collateral at Grantor's address shown
     above or at such other locations as are acceptable to Lender. Upon Lender's
     request,  Grantor will delivery to Lender in form  satisfactory to Lender a
     schedule of real properties and Collateral  locations relating to Grantor's
     operations,  including  without  limitation  the  following:  (1) all  real
     property  Grantor owns or is purchasing:  (2) all real property  Grantor is
     renting or leasing: (3) all storage facilities Grantor owns, rents, leases,
     or  uses;  and (4)  all  other  properties  where  Collateral  is or may be
     located.

     REMOVAL  OF THE  COLLATERAL.  Except in the  ordinary  course of  Grantor's
     business,  Grantor  shall  not  remove  the  Collateral  from its  existing
     location without Lender's prior written  consent.  Grantor shall,  whenever
     requested, advise Lender of the exact location of the collateral.

     TRANSACTIONS  INVOLVING  COLLATERAL.  Except for inventory sold or accounts
     collected in the ordinary course of Grantor's  business,  Grantor shall not
     sell,  offer to sell, or otherwise  transfer or dispose of the  collateral.
     Grantor  shall not  pledge,  mortgage,  encumber  or  otherwise  permit the
     Collateral to be subject to any lien,  security interest,  encumbrance,  or
     charge,  other than the security  interest  provided for in this Agreement,
     without  the prior  written  consent  of  Lender.  This  includes  security
     interests  even if junior in right to the security  interest  granted under
     this Agreement.  Unless waived by Lender, all proceeds from any disposition
     of the collateral  (for whatever  reason) shall be held in trust for Lender
     and shall not be commingled with any other funds;  provided  however,  this
     requirement  shall not  constitute  consent  by Lender to any sale or other
     disposition.  Upon  receipt,  Grantor  shall  immediately  deliver any such
     proceeds to Lender.

     TITLE.  Grantor  represents and warrants to Lender that Grantor holds goods
     and  marketable  title to the  Collateral,  free and clear of all liens and
     encumbrances except for the lien of this Agreement.  No financing statement
     covering any of the  Collateral  is on file in any public office other than
     those which reflect the security  interest  created by this Agreement or to
     which Lender has  specifically  consented.  Grantor  shall defend  Lender's
     rights in the  Collateral  against  the  claims  and  demands  of all other
     persons.

     REPAIRS AND MAINTENANCE.  Grantor agrees to keep and maintain, and to cause
     others to keep and  maintain  the  Collateral  in good  order,  repair  and
     condition  at all times  while this  Agreement  remains in effect.  Grantor
     further  agrees to pay when due all  claims  for work done on, or  services
     rendered or material furnished in connection with the Collateral so that no
     lien or encumbrance may ever attach to or be filled against the collateral.

     INSPECTION OF COLLATERAL.  Lender and Lender's  designated  representatives
     and agents  shall  have the right at all  reasonable  times to examine  and
     inspect the collateral wherever located.

     TAXES,  ASSESSMENTS  AND  LIENS.  Grantor  will  pay  when  due all  taxes,
     assessments and liens upon the Collateral,  it use or operation,  upon this
     Agreement,  upon any promissory note or notes evidencing the  Indebtedness,
     or upon any of the other Related  Documents.  Grantor may withhold any such
     payment  or may  elect to  contest  any lien if  Grantor  is in good  faith
     conducting an  appropriate  proceeding to contest the obligation to pay and
     so long  as  Lender's  interest  in he  Collateral  is not  jeopardized  in
     Lender's  sole opinion.  If the  Collateral is subjected to a lien which is
     not  discharged  with fifteen (15) days,  Grantor shall deposit with Lender
     ash, a sufficient  corporate surety bond or other security  satisfactory to

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                                                                          Page 2
                         COMMERCIAL SECURITY AGREEMENT
                                  (Continued)
================================================================================

     Lender in an amount  adequate to provide for the discharge of the lien plus
     any interest, costs attorneys' fees or other charges that could accrue as a
     result of foreclosure or sale of collateral.  In any contest  Grantor shall
     defend  itself and  Lender and shall  satisfy  any final  adverse  judgment
     before enforcement against the collateral.  Grantor shall name Lender as an
     additional   obligee  under  any  surety  bond  furnished  in  the  contest
     proceedings.  Grantor  further  agrees to furnish Lender with evidence that
     such taxes, assessments,  and governmental and other charges have been paid
     in full and in a timely manner.

     COMPLIANCE WITH  GOVERNMENTAL  REQUIREMENTS.  Grantor shall comply promptly
     with all  laws,  ordinances,  rules  and  regulations  of all  governmental
     authorities,  now or  hereafter  in effect,  applicable  to the  ownership,
     production,  disposition, or use of the Collateral.  Grantor may contest in
     good faith any such law,  ordinance or regulation  and withhold  compliance
     during any proceeding,  including  appropriate appeals, so long as Lender's
     interest in the Collateral, in Lender's opinion, is not jeopardized.

     HAZARDOUS  SUBSTANCES.  Grantor represents and warrants that the collateral
     never has been, and never will be so long as this Agreement  remains a lien
     on the Collateral,  used in violation of any Environmental  Laws or for the
     generation,  manufacture,  storage,  transportation,  treatment,  disposal,
     release  or   threatened   release   of  any   Hazardous   Substance.   The
     representations and warranties  contained herein are based on Grantor's due
     diligence in investigating the Collateral for Hazardous Substances. Grantor
     hereby  (1)  releases  and  waives any  future  claims  against  Lender for
     indemnity or contribution in the event Grantor becomes liable to cleanup or
     other costs under any  Environmental  Laws, and (2) agrees to indemnify and
     hold harmless Lender against any and all claims and losses resulting from a
     breach of this provision of this  Agreement.  This  obligation to indemnify
     shall survive the payment of the  Indebtedness and the satisfaction of this
     Agreement.

     MAINTENANCE OF CASUALTY  INSURANCE.  Grantor shall procure and maintain all
     risks  insurance,  including  without  limitation fire, theft and liability
     coverage  together  with such other  insurance  as Lender may require  with
     respect to the Collateral, in form, amounts, coverages and basis reasonably
     acceptable  to  Lender  and  issued by a company  or  companies  reasonably
     acceptable  to Lender.  Grantor,  upon  request of LEnder will  delivery to
     Lender form time to time the policies or  certificates of Insurance in form
     satisfactory  to Lender,  including  stipulations  that  covers will not be
     canceled  or  diminished  without  at least ten (1) ) days'  prior  written
     notice  to  Lender  and  not  including  any  disclaimer  of the  insurer's
     liability  for failure to give such a notice.  Each  insurance  policy also
     shall  include an  endorsement  providing  that coverage in favor of Lender
     will not bee impaired in any way by an act,  omission or default of Grantor
     or any other person.  In connection  with all policies  covering  assets in
     which Lender holds or is offered a security interest,  Grantor will provide
     Lender with such loss payable or other  endorsements as Lender may require.
     If  Grantor  at any time  fails to  obtain or  maintain  any  insurance  as
     required under this  Agreement,  Lender may (but shall not be obligated to)
     obtain such insurance as Lender deems  appropriate,  including if Lender so
     chooses  "single  interest  insurance,"  which  will  cover  only  Lender's
     interest in the Collateral.

     APPLICATION OF INSURANCE PROCEEDS.  Grantor shall promptly notify Lender of
     any loss or  damage to the  Collateral.  Lender  may make  proof of loss if
     Grantor  fails to do so  within  fifteen  (15)  days of the  casualty.  All
     proceeds of any insurance on the  Collateral,  including  accrued  proceeds
     thereon,  shall be held by  Lender  as part of the  Collateral.  If  Lendor
     consents to repair or replacement  of the damaged or destroyed  Collateral,
     Lender shall,  upon  satisfactory  proof of  expenditure,  pay or reimburse
     Grantor from the Proceeds for the reasonable cost of repair or restoration.
     If Lender  does not  consent to repair or  replacement  of the  Collateral,
     Lender shall  retain a sufficient  amount of the proceeds to pay all of the
     Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
     not been  disbursed  within six (6) months  after  their  receipt and which
     Grantor has not committed to the repair or  restoration  of the  Collateral
     shall be used to prepay the Indebtedness.

     INSURANCE  RESERVES.  Lender may require  Grantor to  maintain  with Lender
     reserves for payment of insurance premiums, which reserves shall be created
     by  monthly  payments  from  Grantor  of a sum  estimated  by  Lender to be
     sufficient  to produce,  at least  fifteen (15) days before the premium due
     date,  amounts at least  equal to the  insurance  premiums  to be paid.  If
     fifteen (15) days before payment is due, the reserve funs are insufficient,
     Grantor shall upon demand pay any  deficiency to Lender.  The reserve funds
     shall be held by  Lender  as a  general  deposit  and  shall  constitute  a
     non-interest-bearing  account  which  Lender may  satisfy by payment of the
     insurance  premiums  required  to be paid by  Grantor as they  become  due.
     Lender does not hold the reserve funds in trust for Grantor,  and lender is
     not the agent of Grantor for payment of the insurance  premiums required to
     be paid by Grantor.  The  responsibility  for the payment of premiums shall
     remain Grantor's sole responsibility.

     INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to Lender
     reports on each existing  policy of insurance  showing such  information as
     Lender may reasonable request including the following:  (1) the name of the
     insurer;  (2) the risks  insured;  (3) the  amount of the  Policy;  (4) the
     property  insured;  (5) the  then  current  value  on the  basis  of  which
     insurance has been obtained and the manner of determining  that value;  and
     (6) the  expiration  date of the policy.  In addition,  Grantor  shall upon
     request  by  Lender   (however  not  more  often  than  annually)  have  an
     independent appraiser satisfactory to Lender determine, as applicable,  the
     cash value or replacement cost of the Collateral.

GRANTOR' S RIGHT TO POSSESSION.  Until default,  Grantor may have  possession of
the tangible  personal property and beneficial use of all the Collateral and may
use it in any lawful manner no  inconsistent  with this Agreement or the Related
Documents,  provided that Grantor's right to possession and beneficial use shall
not apply o any  Collateral  where  possession  of the  Collateral  by Lender is
required by law to perfect Lender's  security  interest in such  collateral.  If
Lender at any time has possession of any Collateral,  whether before or after an
Event of Default,  Lender shall be deemed to have exercised  reasonable  care in
the custody and  preservation  of the Collateral if Lender takes such action for
that purpose as Grantor shall request or as Lender, in Lender's sole discretion,
shall deem appropriate under the circumstance,  but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise  reasonable
care.  Lender  shall not be required  to take steps  necessary  to preserve  any
rights in the  Collateral  against prior  parties,  nor to protect,  preserve or
maintain any security interest given to secure the Indebtedness.

LENDER'S  EXPENDITURES.  If any action or  proceeding  is  commenced  that would
materially  affect  Lender's  interest in the  Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents,  including
but not limited to  Grantor's  failure to  discharge or pay when due any amounts
Grantor is  required to  discharge  or pay under this  Agreement  or any Related
Documents,  Lender on Grantor's  behalf may (but shall not be obligated to) take
any  action  that  Lender  deems  appropriate,  including  but  not  limited  to
discharging or paying all taxes,  liens,  security  interest,  encumbrances  and
other  claims,  at any time  levied or placed on the  Collateral  and paying all
costs  for  insuring,   maintaining  and  preserving  the  Collateral  all  such
expenditures  incurred  or paid by  Lender  for such  purposes  will  then  bear
interest at the rate  charged  under the Note form the date  incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part
of the Indebtedness and, at Lender's option,  will (A) be payable on demand, (B)
be added to the balance of the Note and be apportioned among and be payable with
any  installment  payments  to  become  due  during  either  (1) the term of any
applicable  insurance  policy,  (2) the  remaining  term of the Note,  or (3) be
treated  as a  balloon  payment  which  will be due and  payable  at the  Note's
maturity.  The Collateral also will secure payment of these amounts.  Such right
shall be in  addition to all other  right san  remedies  to which  Lender may be
entitled upon Default.

DEFAULT.  Each of the following shall  constitute an Event of Default under this
Agreement:

     PAYMENT  DEFAULT.  Grantor  fails to make any  payment  when due  under the
     indebtedness.

     OTHER DEFAULTS.  Grantor fails to comply with or to perform any other term,
     obligation,  covenant or condition contained in this agreement or in any of
     the Related Documents or to comply with or to perform any term, obligation,
     covenant or condition  contained in any other agreement  between Lender and
     Grantor.

     FALSE  STATEMENTS.  Any  warranty,  representation  or  statement  made  or
     furnished to Lender by Grantor or on Grantor's behalf under this Agreement,
     the Note,  or the Related  Documents is false or misleading in any material
     respect,  either now or at the time made or furnished  or becomes  false or
     misleading at any time thereafter.

     DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including  failure of any collateral
     document to crate a valid and perfected  security  interest or lien) at any
     time and for any reason.

     INSOLVENCY.  The  dissolution or  termination  of Grantor's  existence as a
     going  business,  the insolvency of Grantor,  the appointment of a received
     for any part of  Grantor's  property,  any  assignment  for the  benefit of
     creditors,  any  type  of  creditor  workout,  or the  commencement  of any
     proceeding under any bankruptcy or insolvency laws by or against Grantor.

     CREDITOR  OR  FORFEITURE   PROCEEDINGS.   Commencement  of  foreclosure  or
     forfeiture   proceedings,   whether  by  judicial  proceeding,   self-help,
     repossession  or any other  method,  by any  creditor  of Grantor or by any
     government agency against any collateral  securing the  Indebtedness.  This
     includes a  garnishment  of any of Grantor's  accounts,  including  deposit
     accounts,  with Lender.  However,  this Event of Default shall not apply if
     there  is  a  good  faith   dispute  by  Grantor  as  to  the  validity  or
     reasonableness  of  the  claim  which  is the  basis  of  the  creditor  or
     forfeiture  proceeding  and if Grantor gives Lender  written  notice of the
     creditor or  forfeiture  proceeding  and deposits  with Lender  monies or a
     surety  bond  for the  creditor  or  forfeiture  proceeding,  in an  amount
     determined by Lender, in its sole discretion,  as being an adequate reserve
     or bond for the dispute.

     EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
     to  guarantor,  endorser,  surety  or  accommodation  party  of  any of the
     Indebtedness or guarantor, endorser, surety, or accommodation party dies or
     becomes incompetent.

     ADVERSE  CHANGE.  A material  adverse change occurs in Grantor's  financial
     condition, or Lender believes the prospect of payment or performance of the
     Indebtedness is impaired.

     INSECURITY. Lender in good faith believes itself insecure.

     CURE  PROVISIONS.  If any  default,  other  than a default in  payment,  is
     curable  and if Grantor has not been given a notice of a breach of the same
     provision of this Agreement within the preceding twelve (12) months, it may
     be cured (and no event of default  will have  occurred)  if Grantor,  after
     receiving  written notice from Lender  demanding cure of such default:  (a)
     cure the default with fifteen (15) days;  or (b) if the cure  requires more
     than fifteen (15) days,  immediately  initiate  steps which Lender deems in
     Lender's  sole  discretion  to  be  sufficient  to  cure  the  default  and
     thereafter

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                                                                          Page 3
                         COMMERCIAL SECURITY AGREEMENT
                                  (Continued)
================================================================================

     continue and complete all  reasonable  and  necessary  steps  sufficient to
     produce compliance as soon as reasonable practical.

     RIGHTS AND  REMEDIES ON DEFAULT.  If an Event of Default  occurs under this
     Agreement,  at any time thereafter,  Lender may exercise any one or more of
     the following rights and remedies:

     ACCELERATE INDEBTEDNESS. Declare all Indebtedness, including any prepayment
     penalty  which  Grantor  would  be  required  to pay,  immediately  due and
     payable, without notice of any kind to Grantor.

     ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all or
     any portion of the  Collateral  and any and all  certificates  of title and
     other  documents  relating to the Collateral.  Lender may require  Grantors
     assemble  the  Collateral  and make  available  to  Lender at a place to be
     designated  by Lender.  Lender also shall have full power to enter upon the
     property of Grantor to take possession of and remove the Collateral. If the
     collateral  contains  other goods not covered by this Agreement at the time
     of  repossession,  grantor agrees Lender may take such other goods provided
     that  Lender  makes  reasonable  efforts to return  them to  Grantor  after
     repossession.

     SELL THE COLLATERAL. Lender shall have full power to sell, lease, transfer,
     or otherwise deal with the  Collateral or proceeds  thereof in Lender's own
     name or that of Grantor.  Lender may sell the  Collateral at public auction
     or private sale.  Unless the  Collateral  threatens to decline  speedily in
     value or is of a type customarily sold on a recognized market,  Lender will
     give Grantor  reasonable notice of the time after which any private sale or
     any  other  intended  disposition  of the  Collateral  is to be  made.  The
     requirements  of reasonable  notice shall be met if such notice is given at
     least  ten  (10)  days  before  the time of the  sale or  disposition.  All
     expenses  relating to the disposition of the Collateral,  including without
     limitation the expenses of retaking, holding, insuring,  preparing for sale
     and selling the collateral, shall become a part of the Indebtedness secured
     by this Agreement and shall be payable on demand, with interest at the Note
     rate from date of expenditure until repaid.

     APPOINT RECEIVER.  Lender shall have the right to have a received appointed
     to take possession of all or any part of the Collateral,  with the power to
     protect and preserve the  collateral,  to operate the Collateral  preceding
     foreclosure or sale, and to collect the Rents from the Collateral and apply
     the  proceeds,  over and above the cost of the  receivership,  against  the
     indebtedness.  The  received  may serve  without  bond if permitted by law.
     Lender's right to the  appointment of a receiver shall exist whether or not
     the  apparent  value  of  the  Collateral  exceeds  the  Indebtedness  by a
     substantial amount. Employment by Lender shall not disqualify a person from
     serving as a received.

     COLLECT  REVENUES,  APPLY  ACCOUNTS.  Lender,  either  itself or  through a
     receiver,  may collect the payments,  rents,  income, and revenues from the
     Collateral.  Lender may at any time in  Lender's  discretion  transfer  any
     Collateral into Lender's own name or that of Lender's  nominee and received
     the payments,  rents,  income,  and revenues therefrom and hold the same as
     security for the Indebtedness or apply it to payment of the indebtedness in
     such order of preference as Lender may determine. Insofar as the Collateral
     consists of accounts, general intangibles, insurance policies, instruments,
     chattel paper,  chooses in action, or similar property,  Lender may demand,
     collect,  receipt for, settle,  compromise,  adjust, sue for, foreclose, or
     realize  on  the  Collateral  as  Lender  may  determine   whether  or  not
     indebtedness or Collateral is then due. For these purposes,  Lender may, on
     behalf of and in he name of  Grantor,  receive,  open and  dispose  of mail
     addressed to Grantor;  change any address to which mail and payments are to
     be sent;  and endorse notes,  checks,  drafts,  money orders,  documents of
     title, instruments and items pertaining to payment, shipment, or storage of
     any Collateral. To facilitate collection, Lender may notify account debtors
     and obligors on any Collateral to make payments directly to Lender.

     OBTAIN DEFICIENCY.  If Lender chooses to sell any or all of the Collateral,
     Lender may obtain a judgment  against Grantor for any deficiency  remaining
     on the indebtedness due to Lender after application of all amounts received
     form the exercise of the rights provided in this  Agreement.  Grantor shall
     be  liable  for a  deficiency  even if the  transaction  described  in this
     subsection is a sale of accounts or chattel paper.

     OTHER RIGHTS AND  REMEDIES.  Lenders shall have all the rights and remedies
     of a secured  creditor under the provision of the Uniform  Commercial Code,
     as may be amended from time to time. In addition, Lender shall have and may
     exercise any or all other rights and remedies it may have available at law,
     inequity, or otherwise

     ELECTION OF REMEDIES. Except as may be prohibited by applicable law, all of
     Lender's  rights and  remedies,  whether  evidence by this  Agreement,  the
     Related Documents,  or by any other writing, shall be cumulative and may be
     exercised  singularly  or  concurrently.  Election  by Lender to pursue any
     remedy will not bar any other remedy,  and an election to make expenditures
     or to take action to perform an obligation of Grantor under this Agreement,
     after  Grantor's  failure to perform,  shall not affect  Lender's  right to
     declare a default and exercise its remedies.

MISCELLANEOUS  PROVISIONS.  The following  miscellaneous provision are a part of
this Agreement:

     AMENDMENTS.   This   Agreement,   together  with  any  Related   Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement.  No alteration of or amendment to this
     Agreement  shall be  effective  unless  given in writing  and signed by the
     party or  parties  sought  to be  charged  or bound  by the  alteration  or
     amendment.

     ATTORNEYS'  FEES:  EXPENSES.  Grantor  agrees  to pay  upon  demand  all of
     Lender's  costs  and  expenses,  including  Lender's  attorneys'  fees  and
     Lender's legal  expenses,  incurred in connection  with the  enforcement of
     this  Agreement.  Lender may hire or pay someone  else to help enforce this
     Agreement,   and  Grantor   shall  pay  the  costs  and  expenses  of  such
     enforcement.  Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit,  including  attorneys' fees and
     legal expenses for bankruptcy  proceedings  (including efforts to modify or
     vacate any automatic  stay or  injunction),  appeals,  and any  anticipated
     post-judgement  collection services.  Grantor also shall pay all court cost
     and such additional fees as may be directed by the court.

     CAPTION  HEADINGS.  Caption  headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the  provisions
     of this Agreement.

GOVERNING  LAW. This  Agreement  will be governed by,  construed and enforced in
accordance  with federal law and the laws of the State of North  Carolina.  This
agreement has been accepted by Lender in the State of North Carolina.

     NO WAIVER BY LENDER.  Lender  shall not be deemed to have waived any rights
     under this  Agreement  unless such waiver is given in writing and signed by
     Lender.  No delay or omission on the part of Lender in exercising any right
     shall  operate  as a waiver of such right or any other  right.  A waiver by
     Lender of a provision of this Agreement shall not prejudice or constitute a
     waiver of Lender's right  otherwise to demand strict  compliance  with that
     provision  or any other  provision  of this  Agreement.  No prior waiver by
     Lender,  nor any  course of  dealing  between  Lender  and  grantor,  shall
     constitute  a  waiver  of any of  Lender's  rights  or of any of  Grantor's
     obligations as to any future  transactions.  Whenever the consent of Lender
     is required under this Agreement, the granting of such consent by Lender in
     any  instance  shall  not  constitute   continuing  consent  to  subsequent
     instances  where such consent is required and in all cases such consent may
     be granted or withheld in sole discretion of Lender.

     NOTICES.  Any notice  required  to be given under this  Agreement  shall be
     given in writing,  and shall be effective  when  actually  delivered,  when
     actually received by telefacsimile (unless otherwise required by law), when
     deposited with a nationally  recognized  overnight courier,  or, if mailed,
     when  deposited  in the United  States  mail,  as first class  certified or
     registered mail postage  prepaid,  directed to the addresses shown near the
     beginning of this  Agreement.  Any party may change its address for notices
     under this  Agreement by giving formal written notice to the other parties,
     specifying that the purpose of the notice is to change the party's address.
     For notice purposes, Grantor agrees to keep Lender informed at all times of
     Grantor's current address. Unless otherwise provided or required by law, if
     there is more than one Grantor, any notice g given by Lender to any Grantor
     is deemed to be notice given to all Grantors

     POWER OF ATTORNEY.  Grantor hereby appoints Lender as Grantor's irrevocable
     attorney-in-fact  for the purpose of executing any  documents  necessary to
     perfect or to continue the  security  interest  granted in this  Agreement.
     Lender may at any time,  and without  further  authorization  from Grantor,
     file  a  carbon,  photographic  or  other  reproduction  of  any  financing
     statement or of this Agreement for use as financing statement. Grantor will
     reimburse  Lender for all expenses for the perfection and the  continuation
     of the perfection of Lender's security interest in the collateral.

     SEVERABILITY.  If a court of competent  jurisdiction finds any provision of
     this  Agreement  to  be  illegal,  invalid,  or  unenforceable  as  to  any
     circumstance,  that finding shall not make the offending provision illegal,
     invalid,  or unenforceable as to any other circumstance.  If feasible,  the
     offending  provision shall be considered modified so that it becomes legal,
     valid and enforceable. If the offending provision cannot be so modified, it
     shall be considered deleted from this AGreement.  Unless otherwise required
     by law, the illegality, invalidity, or unenforceability of any provision of
     this Agreement shall not affect the legality, validity or enforceability of
     any other provision of this Agreement.

     SUCCESSORS AND ASSIGNS.  Abject to any limitations  stated in his agreement
     on transfer of Grantor's interest, this Agreement shall be binding upon and
     inure to the benefit of the  parties,  their  successors  and  assigns.  If
     ownership of the Collateral  becomes vested in a person other than Grantor,
     Lender,  without notice to Grantor, may deal with Grantor's successors with
     reference to this  Agreement and the  indebtedness  by way o forbearance or
     extension  without releasing Grantor from the obligations of this Agreement
     or liability under the Indebtedness.

     SURVIVAL  OF   REPRESENTATIONS   AND   WARRANTIES.   All   representations,
     warranties,  and agreements made by Grantor in this Agreement shall survive
     the  execution  and  delivery of this  AGreement,  shall be  continuing  in
     nature,  and shall  remain  in full  force and  effect  until  such time as
     Grantor's indebtedness shall be paid in full.

     TIME IS OF THE ESSENCE.  Time is of the essence in the  performance of this
     Agreement.

DEFINITIONS.  The following capitalized words and terms shall have the following
meanings  when  used  in  this  Agreement.  Unless  specifically  stated  to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the

<PAGE>

                                                                          Page 4
                         COMMERCIAL SECURITY AGREEMENT
                                  (Continued)
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singular shall include the plural, and the plural shall include the singular, as
the context may require. Words and terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Uniform Commercial Code:

     AGREEMENT. The word " Agreement" means this Commercial Pledge Agreement, as
     this  Commercial  Pledge  Agreement may be amended or modified from time to
     time,  together with all exhibits and schedules attached to this Commercial
     Pledge Agreement from time to time.

     BORROWER.  The word " Borrower" means  Wellington  Hall,  Limited,  and all
     other persons and entities signing the Note in whatever capacity.

     COLLATERAL.  The word "Collateral:  means all of Grantor's right, title and
     interest  in and to all  the  Collateral  as  described  in the  Collateral
     Description section of this Agreement.

     DEFAULT.  The word "Default"  means the Default set forth in this Agreement
     in the section titled "Default".

     ENVIRONMENTAL  LAWS. The words " Environmental Laws' mean any and all state
     and federal and local statutes,  regulations and ordinances relating to the
     protection of human health or the environment, including without limitation
     the Comprehensive Environmental Response,  Compensation,  and Liability Act
     of 1980,  as amended,  42 U.S.C.  Section  9601,  et seq.  ("CERCLA"),  the
     Superfund  Amendments and  Reauthorization  Act of 1986,  Pub. L No. 99-499
     ("SARA"),  the Hazardous Materials  Transportation  Act, 49 U.S.C.  Section
     1801,  et seq.,  the  Resource  Conservation  and  REcover  Act, 42 U.S.C..
     Section 6901, et seq., or other  applicable state or federal laws, rules or
     regulations adopted pursuant thereto.

     EVENT OF DEFAULT.  The words  "Event of Default"  mean any of the events of
     default  set  forth  in  this  Agreement  in the  Default  section  of this
     Agreement. GRANTOR. The word "Grantor" means Wellington Hall, Limited.

     HAZARDOUS SUBSTANCES. The words' Hazardous Substances' mean materials that,
     because of their quantity, concentration or physical chemical or infectious
     characteristics,  may cause or pose a present or potential  hazard to human
     health or the environment when improperly used, treated,  stored,  disposed
     of, generated,  manufactured,  transported or otherwise handled.  The words
     "Hazardous  Substances"  are used in their very broadest  sense and include
     without limitation any and all hazardous or toxic substances,  materials or
     waste as  defined  by or listed  under  the  Environmental  Laws.  The term
     "hazardous  Substances" also includes,  without  limitation,  petroleum and
     petroleum by-products or any fraction thereof and asbestos.

     INDEBTEDNESS.  The word "indebtedness" means the indebtedness  evidenced by
     the  Note or  Related  Documents,  including  all  principal  and  interest
     together  with all other  indebtedness  and costs  and  expenses  for which
     Grantor  irresponsible  under this  Agreement  or under any of the  Related
     Documents.

     LENDER.  the word "Lender" means  Lexington  State Bank, its successors and
     assigns.

     NOTE.  The word "Note" means the Note  executed by Grantor in the principal
     amount of $1,529,784.00 dated June 16, 1999, together with all renewals of,
     extensions of,  modifications  of, re financing of  consolidations  of, and
     substitutions of the note or credit agreement.

     OBLIGOR.  The word "Obligor"  means without  limitation any and all persons
     obligated to pay money or to perform some other act under the Collateral.

     RELATED DOCUMENTS. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements,  environmental agreements,  guaranties,
     security agreements,  mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed connection with the Indebtedness.

GRANTOR HAS READ AND  UNDERSTOOD ALL THE  PROVISIONS OF THIS  COMMERCIAL  PLEDGE
AGREEMENT AND AGREES TO ITS TERMS.  THIS AGREEMENT IS DATED JUNE 16, 1999.  THIS
AGREEMENT  IS GIVEN UNDER SEAL AND IT IS  INTENDED  THAT THIS  AGREEMENT  IS AND
SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

GRANTOR:                                (CORPORATE SEAL)
                                        ATTEST: /s/ WILLIAM W. WOODRUFF
                                                -----------------------------
WELLINGTON HALL, LIMITED                        WILLIAM W. WOODRUFF, SECRETARY

BY: /s/ HOYT M. HACKNEY, JR.  (SEAL)    BY: /s/ WILLIAM W. WOODRUFF
    --------------------------             ---------------------------------
    HOYT M. HACKNEY, JR. PRESIDENT OF      WILLIAM W. WOODRUFF, SECRETARY OF
    WELLINGTON HALL, LIMITED               WELLINGTON HALL, LIMITED

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