UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[ x ] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Period Ended December 31, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Transition Period From_________________to___________________
Commission file number 1-652
UNIVERSAL CORPORATION
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(Exact name of Registrant as specified in its charter)
VIRGINIA 54-0414210
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1501 North Hamilton Street, Richmond, Virginia 23230
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code - (804) 359-9311
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock as of the latest practicable date:
Common Stock, No par value - 33,233,334 shares
outstanding as of February 8, 1999
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Universal Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Three and Six Months Ended December 31, 1998 and 1997
(In thousands of dollars, except per share data)
<CAPTION>
Three Months Six Months
1998 1997 1998 1997
-------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Sales and other operating revenues $1,297,719 $1,265,157 $2,177,004 $2,288,313
Costs and expenses
Cost of goods sold 1,129,187 1,093,490 1,871,888 1,974,411
Selling, general and administrative expenses 85,670 87,142 163,984 165,579
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Operating Income 82,862 84,525 141,132 148,323
Equity in pretax earnings of unconsolidated affiliates 1,212 1,512 1,782 5,257
Interest expense 13,146 15,879 28,688 29,681
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Income before income taxes and other items 70,928 70,158 114,226 123,899
Income taxes 26,243 28,691 42,264 49,997
Minority interests 3,261 3,382 3,481 3,044
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Net Income $ 41,424 $ 38,085 $ 68,481 $ 70,858
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Earnings per share $ 1.23 $ 1.08 $ 2.02 $ 2.02
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Diluted earnings per share $ 1.23 $ 1.08 $ 2.01 $ 2.00
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Retained earnings - Beginning of period $508,137 $424,298
Net income 68,481 70,858
Cash dividends declared ($.58 - 1998; $.545 - 1997) (19,415) (19,191)
Purchase of common stock (54,004)
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Retained earnings - End of period $503,199 $475,965
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<PAGE>
Universal Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
<CAPTION>
December 31, June 30,
1998 1998
-------------------- ----------------------
ASSETS
Current
Cash and cash equivalents $ 80,479 $ 79,835
Accounts receivable 375,783 392,821
Advances to suppliers 107,183 104,439
Accounts receivable - unconsolidated affiliates 14,323 49,343
Inventories - at lower of cost or market:
Tobacco 687,424 541,822
Lumber and building products 92,089 97,071
Agri-products 67,910 89,990
Other 23,705 33,162
Prepaid income taxes 8,139 18,347
Deferred income taxes 4,152 3,794
Other current assets 18,882 19,665
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Total current assets 1,480,069 1,430,289
Property, plant and equipment - at cost
Land 31,570 29,951
Buildings 236,871 219,594
Machinery and equipment 498,746 466,177
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767,187 715,722
Less accumulated depreciation 407,905 385,967
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359,282 329,755
Other assets
Goodwill 120,542 120,889
Other intangibles 19,683 18,586
Investments in unconsolidated affiliates 87,898 87,052
Other noncurrent assets 80,344 70,134
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308,467 296,661
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$2,147,818 $2,056,705
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See accompanying notes.
<PAGE>
Universal Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
<CAPTION>
December 31, June 30,
1998 1998
-------------------- ----------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Notes payable and overdrafts $ 525,730 $ 586,450
Accounts payable 289,599 285,994
Accounts payable - unconsolidated affiliates 12,601 17,116
Customer advances and deposits 294,898 125,311
Accrued compensation 18,786 24,706
Income taxes payable 25,459 27,693
Current portion of long-term obligations 30,841 34,251
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Total current liabilities 1,197,914 1,101,521
Long-term obligations 240,881 263,140
Postretirement benefits other than pensions 43,947 44,535
Other long-term liabilities 49,002 40,909
Deferred income taxes 29,248 27,065
Minority interests 35,687 31,668
Shareholders' equity
Preferred stock, no par value, authorized 5,000,000
shares none issued or outstanding
Common stock, no par value, authorized 50,000,000
shares, issued and outstanding 33,358,984 shares
(34,866,406 at June 30, 1998) 78,673 80,122
Retained earnings 503,199 508,137
Accumulated other comprehensive income (30,733) (40,392)
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Total shareholders' equity 551,139 547,867
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$ 2,147,818 $ 2,056,705
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See accompanying notes.
<PAGE>
Universal Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31, 1998 and 1997
(In thousands of dollars)
<CAPTION>
December 31, December 31,
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 68,481 $ 70,858
Adjustments to reconcile net income to net
cash provided by operating activities 29,000 30,700
Changes in operating assets and liabilities net of
effects from purchase of businesses 100,363 (54,842)
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Net cash provided by operating activities 197,844 46,716
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (38,700) (51,700)
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Net cash used in investing activities (38,700) (51,700)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance (repayment) of short-term debt, net (60,700) 52,000
Repayment of long-term debt (23,000) (20,000)
Purchases of common stock (57,700)
Issuance of common stock 2,300 5,300
Dividends paid (19,400) (19,200)
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Net cash provided (used) in financing activities (158,500) 18,100
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Net increase in cash and cash equivalents 644 13,116
Cash and cash equivalents at beginning of year 79,835 109,070
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 80,479 $ 122,186
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</TABLE>
<PAGE>
Universal Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
All figures contained herein are unaudited.
1) Universal Corporation, together with its subsidiaries and affiliates, is also
referred to as the Company or Universal. The operations of domestic and foreign
tobacco, lumber and building products, and agri-products segments are seasonal.
Therefore, the results of operations for the six-month period ended December 31,
1998, are not necessarily indicative of results to be expected for the year
ending June 30, 1999. All adjustments necessary to state fairly the results for
such period have been included and were of a normal recurring nature.
2). Contingent liabilities: At December 31, 1998, total exposure under
guarantees issued for banking facilities of unconsolidated affiliates was
approximately $11 million. Other contingent liabilities approximate $40 million
and relate principally to performance bonds and Common Market Guarantees. The
Company's Brazilian subsidiaries have been notified by the tax authorities of
proposed adjustments to the income tax returns filed in prior years. The total
proposed adjustments, including penalties and interest, approximate $40 million;
however, recent currency fluctuations and possible interest rate changes could
affect that amount. The Company believes the Brazilian tax returns filed were in
compliance with the applicable tax code. The numerous proposed adjustments vary
in complexity and amounts. While it is not feasible to predict the precise
amount or timing of each proposed adjustment, the Company believes that the
ultimate disposition will not have a material adverse effect on the Company's
consolidated financial position or results of operations. At December 31, 1998,
the Company had outstanding short-term loans of $29 million and long-term loans
of $17.2 million to a farmer cooperative in Argentina. The loans are secured by
tobacco and liens on real property, processing machinery and equipment and other
assets of the cooperative. Upon export of the tobacco, which is usually in less
than twelve months, the short-term loans should be recovered. The long-term
loans are scheduled for repayment over the next nine years. Ultimate collection
of the loans is contingent upon the ability of the farmers to produce
competitively priced tobacco suitable for export, the financial management of
the cooperative and the value of the assets pledged as security for the loans.
3) As of July 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130,"Reporting Comprehensive Income" (SFAS 130). The adoption of
this statement had no impact on the Company's net income or shareholders'
equity. SFAS 130 establishes new rules for the reporting and display of
comprehensive income and its components. SFAS 130 requires foreign currency
translation adjustments to be included in other comprehensive income. Amounts in
prior year financial statements have been reclassified to conform to SFAS 130.
<TABLE>
<CAPTION>
Three Months Six Months
Periods ended December 31, 1998 1997 1998 1997
----------------- ----------------- ----------------- -----------------
(in millions of dollars)
<S> <C> <C> <C> <C>
Net income $41 $38 $68 $71
Foreign currency translation adjustment 8 2 10 (5)
----------------- ----------------- ----------------- -----------------
Comprehensive income $49 $40 $78 $66
================= ================= ================= =================
4) The following table sets forth the computation of earnings per share and
diluted earnings per share.
Three Months Six Months
Periods ended December 31, 1998 1997 1998 1997
----------------- ----------------- ----------------- -----------------
Net income (in thousands of dollars) $41,424 $38,085 $68,481 $70,858
Denominator for earnings per share:
Weighted average shares 33,571,791 35,172,358 33,981,541 35,155,747
Effect of dilutive securities:
Employee stock options 42,832 217,767 67,693 204,113
----------------- ----------------- ----------------- -----------------
Denominator for diluted earnings per share 33,614,623 35,390,125 34,049,234 35,359,860
Earnings per share $1.23 $1.08 $2.02 $2.02
================= ================= ================= =================
Diluted earnings per share $1.23 $1.08 $2.01 $2.00
================= ================= ================= =================
</TABLE>
5) The lower estimated effective tax rate in fiscal year 1999 is due to the
anticipated mix of foreign and domestic earnings and management's current
assessment of pending and contested tax issues.
6) Amounts in the three- and six-month periods for the last year have been
reclassified to be reported on a consistent basis with the current year's
presentation.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Working capital declined from $329 million at June 30, 1998 to $282
million at December 31, 1998. Although the net change in current assets and
current liabilities was $50 million and $96 million respectively, the components
of working capital on a comparative basis fluctuated to varying degrees compared
to June 30th primarily due to the seasonality of tobacco operations. The
majority of the increase in current assets was reflected in tobacco inventory
which in turn was supported by an increase in customer advances. The increases
primarily represent purchases of crops that have not been processed and/or
shipped due to customer requirements. In the United States, December 31 tobacco
working capital needs represent a combination of unshipped processed flue-cured
tobacco plus burley tobacco purchases from mid-November. A significant
percentage of the Company's U. S. burley volume is purchased in the second
quarter of the fiscal year. Processing begins shortly after purchase of the
tobacco and continues through the beginning of the fourth quarter. June 30th
usually represents the low point of U.S. tobacco working capital needs as most
of the current crop has been shipped. Variations may occur quarter to quarter in
the proportion of notes payable and customer advances that support inventories,
depending on the Company's and its customers' borrowing capabilities, interest
rates and exchange rates.
Although working capital changes reflected a seasonal increase as is
the pattern in the industry, the amount of that increase in inventory is
significantly lower than that of last year. The lower seasonal investment is
primarily due to the lower prices of green tobacco worldwide and the smaller
tobacco crop in Brazil. This lower inventory investment is also reflected in
lower financing requirements.
The Company generally does not purchase tobacco in the U.S. on a
speculative basis. In a number of foreign operating regions the Company may
advance funds for the purchase of tobacco or in some cases advance farmers
agricultural materials, such as seed and fertilizer. These advances are
recovered from the delivery of tobacco by the respective creditor. See note 2 of
the Company's notes to the financial statements for additional information
regarding advances in Argentina.
Generally, the Company's international tobacco operations conduct
business in U.S. dollars, thereby limiting foreign exchange risk to local
production and overhead costs. Agri-product and lumber operations enter into
foreign exchange contracts to hedge firm purchase and sales commitments for
terms of less than six months. Contracts used to manage foreign currency risks
are not material. Interest rate risk is limited because customers in the tobacco
business usually pre-finance purchases or pay market rates of interest for
inventory purchased for their accounts.
The Company continues to purchase its common stock pursuant to a $100
million repurchase plan announced in May 1998. In addition, on February 4, 1999,
the Company's Board of Directors authorized an additional $100 million purchase
through June 30, 2000. As of December 31, 1998, cumulative share purchases were
2.2 million shares for approximately $77.5 million. The repurchase plans have
been and are expected to continue to be funded from operating cash flows. The
liquidity and capital resources of the Company at December 31, 1998, remain
adequate to support the Company's foreseeable operating needs.
Results of Operations
'Sales and Other Operating Revenues' for the second quarter of fiscal
year 1999 were up slightly and declined 5% for the six months compared to last
year. The six-month decline reflects the impact of shipment timing in the first
quarter primarily due to African and dark tobacco operations. In addition, the
Company contributed its Turkish subsidiary into a joint venture in oriental
tobaccos during the fourth quarter last year. Revenues for lumber and building
products and agri-products were comparable for the six-month periods. `Operating
Income' for the quarter and the six-month period ended December 31, 1998,
declined 2% and 5% respectively compared to the same periods last year. In the
quarter, Brazilian results were off slightly due to lower volumes handled out of
the smaller crop and similarly, a smaller U.S. flue-cured crop resulted in lower
volumes processed during the quarter. In addition, there were quality problems
with crops in Argentina and Kyrgystan, while shipments of some Oriental tobacco
by the Company's joint venture have been delayed until the second half of the
year. The negative impact of these developments was partially offset by improved
results in Africa and the Far East. For the six months, these factors combined
with shipment timing issues in the first quarter held tobacco earnings for the
period below last year's record pace. Dark results in the quarter improved,
reflecting the continued tight world market for wrapper leaf, and old crop
shipments. For the six months, dark tobacco results were comparable to last
year. Lumber and building products results were adversely affected in the
quarter by excessive rains in Holland that disrupted construction activity and
impacted the regional sales outlets. Wholesale results also declined due to
margin pressures. However, industrial timber earnings were up due to improved
margins. Agri-product results were comparable to last year for the quarter and
six-month period.
Interest expense was down from the comparable periods last year
principally reflecting lower borrowing levels by the Company due in part to
lower tobacco leaf prices. The estimated effective tax rate for fiscal 1999 was
37% compared to 40% in the previous year primarily due to the anticipated mix of
foreign and domestic earnings and management's current assessment of pending and
contested tax issues.
It should be noted that although recent news from Brazil has caused
concern in world financial circles, the currency devaluation may well be
favorable for the future export of Brazilian tobacco. However, the leaf industry
will continue to face uncertainties in the months ahead resulting from the
aftermath of the tobacco settlement in the U.S., from continued economic and
financial turmoil in a number of Southeast Asian areas, Latin America and the
former Soviet Union and from uncommitted inventories held in the trade.
These factors, which affect the overall industry environment, have thus
far not had a significant effect on Universal's operations and should not
materially affect earnings for the year. Management remains confident about the
Company's strategic direction. The Company has continued to minimize unsold
inventories. Therefore, despite the effect of adverse weather in some areas on
tobacco production and on construction activity and lumber sales in Holland,
management still expects to achieve earnings for the year form continuing
operations in line with its previous projections.
The Company cautions readers that the statements contained herein
regarding expected earnings are forward-looking statements based upon
management's current knowledge and assumptions about future events, including
anticipated levels of demand for the Company's products and services, costs
incurred in providing these products and services, and timing of shipments to
customers. Lumber earnings could also be affected by a number of factors,
including currency translations, and unusual weather conditions in the
Netherlands. Actual results, therefore could vary from those expected. For more
details on factors that could affect expectations, see the Company's Annual
Report on Form 10-K for the year ended June 30, 1998, as filed with the
Securities and Exchange Commission.
As reported in the Company's 1998 Annual Report on Form 10-K (refer to
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Year 2000), the Company has developed a plan to mitigate the effects
of the year 2000 problem on its operations. At the time of the report, it was
expected that by December 31, 1998, all of the Company's business locations
would complete the assessment and remediation phases of the plan's internal
aspects. Currently several business locations are not expected to complete the
remediation phase until June 30, 1999. However, this delay should not have a
material adverse effect on the Company's plan. In conjunction with contingency
planning for the year 2000, the Company's operating regions have submitted
drafts of their contingency plans, which have identified potential risk areas,
and the possibility of a disruption to related business operations. These
contingency plans are currently being reviewed by the Company.
The Company has revised its total estimated costs of addressing the
year 2000 problem from $5.7 million to $7.5 million primarily to reflect certain
internal costs that had previously been omitted. Approximately $6.7 million was
spent through December 31, 1998. The Company does not expect the total cost of
preparing its internal technology for the year 2000 to be material to its
consolidated financial condition or results of operations.
Reference is made to Items 1 and 7 and the Notes to the Consolidated
Financial Statements in Item 8 of the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1998, and "Management's Discussion and Analysis
of Financial Conditions and Results of Operations - Other Information Regarding
Trends and Management's Actions - Factors That May Affect Future Results" in the
Annual Report regarding important factors that would cause actual results to
differ materially from those contained in any forward-looking statement made by
or on behalf of the Company, including forward-looking statements contained in
Item 2 of this Form 10-Q.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
--------
4 Form of Common Stock Certificate, effective February 13, 1999.*
10.1 Universal Corporation Amended and Restated 1994 Stock Option Plan
for Non-Employee Directors. *
10.2 Form of Amendment to Non-Employee Director Non-Qualified Stock
Option Agreement(s).*
10.3 First Amendment to the Universal Leaf Tobacco Company,
Incorporated Benefit Restoration Trust, dated January 12, 1999,
between Universal Leaf Tobacco Company, Incorporated and Wachovia
Bank, N. A., as trustee. *
10.4 Form of Non-Employee Director Restricted Stock Agreement. *
27 Financial Data Schedule.*
b. Reports on Form 8-K
* Filed Herewith
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 11, 1999 UNIVERSAL CORPORATION
------------------------------------------
(Registrant)
/s/ Hartwell H. Roper
------------------------------------------
Hartwell H. Roper, Vice President and
Chief Financial Officer
/s/ William J. Coronado
------------------------------------------
William J. Coronado, Vice President
and Controller
(Principal Accounting Officer)
Exhibit 4
[FRONT OF STOCK CERTIFICATE]
COMMON COMMON
THIS CERTIFICATE IS TRANSFERABLE
IN NEW YORK, NY, BOSTON, MA OR
WINSTON-SALEM, NC
INCORPORATED UNDER THE LAWS
OF THE COMMONWEALTH OF VIRGINIA
CUSIP 913456 10 9
SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
UNIVERSAL CORPORATION
This certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON CAPITAL STOCK OF
Universal Corporation (hereinafter called "the Company") transferable on the
books of the Corporation in person or by duly authorized attorney upon surrender
of this certificate properly endorsed. This certificate and the shares
represented hereby are subject to all of the terms, conditions, and limitations
of the Articles of Incorporation of the Company and all amendments thereto. This
certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
In Witness Whereof, the Company has caused this certificate to be
sealed with a facsimile of its corporate seal and to be signed by its duly
authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED: /S/ Henry H. Harrell
WACHOVIA BANK, N.A. CHAIRMAN AND
WINSTON SALEM, NC CHIEF EXECUTIVE OFFICER
TRANSFER AGENT
AND REGISTRAR
BY /S/ J. M. White, III
AUTHORIZED SIGNATURE SECRETARY
[SEAL]
<PAGE>
[BACK OF STOCK CERTIFICATE]
UNIVERSAL CORPORATION
THE COMPANY WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST, AND WITHOUT
CHARGE, A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS, AND
RELATIVE RIGHTS OF EACH CLASS OF STOCK WHICH THE COMPANY IS AUTHORIZED TO ISSUE.
REQUESTS MAY BE DIRECTED TO UNIVERSAL CORPORATION, 1501 NORTH HAMILTON STREET,
RICHMOND, VIRGINIA 23230.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with right of
survivorship and not as tenants Act . . . . . . . . .
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, __________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------Shares
of the Capital Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- --------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within named Company
with full power of substitution in the premises.
Dated
---------------------
----------------------------------------
In Presence of
Signature(s) Guaranteed:
- ----------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION. AS
DEFINED IN RULE 17Ad-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in an Agreement between Universal Corporation and
Wachovia Bank, N.A., dated as of December 3, 1998, as it may be amended from
time to time (the "Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal executive
offices of Universal Corporation. Under certain circumstances, as set forth in
the Agreement, such Rights (as defined in the Agreement) will be evidenced by
separate certificates and will no longer be evidenced by this certificate.
Universal Corporation will mail to the holder of this certificate a copy of the
Agreement without charge after receipt of a written request therefor. As set
forth in the Agreement, Rights beneficially owned by any Person (as defined in
the Agreement) who becomes an Acquiring Person (as defined in the Agreement)
become null and void.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
Exhibit 10.1
UNIVERSAL CORPORATION
AMENDED AND RESTATED
1994 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Article I
DEFINITIONS
1.01 Affiliate means any "subsidiary" or "parent corporation" (within
the meaning of Section 424 of the Code) of the Company.
1.02 Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Grant issued to such Participant.
1.03 Board means the Board of Directors of the Company.
1.04 Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.05 Commission means the Securities and Exchange Commission or any
successor agency.
1.06 Committee means the Executive Compensation Committee of the Board.
1.07 Common Stock means the Common Stock of the Company.
1.08 Company means Universal Corporation.
1.09 Exchange Act means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
1.10 Fair Market Value means, on any given date, the closing price of a
share of Common Stock as reported on the New York Stock Exchange composite tape
on such day or, if the Common Stock was not traded on the New York Stock
Exchange on such day, then on the next preceding day that the Common Stock was
traded on such exchange, all as reported by such source as the Committee may
select. If there is no regular public trading market for the Common Stock, the
Fair Market Value shall be determined by the Committee in good faith.
1.11 Grant means the grant of an Option.
1.12 Non-Employee Director means a member of the Board who is not an
employee of the Company or an Affiliate and was not such an employee within
three years prior to his or her first election to the Board.
1.13 Option means a stock option that entitles the holder to purchase
from the Company under the terms of this Plan the number of shares of Common
Stock set forth in Article IV at the Option Price.
1.14 Option Price means the price per share for Common Stock purchased
on the exercise of an Option as provided in Article IV.
1.15 Participant means a Non-Employee Director who is eligible to
receive a Grant under this Plan.
1.16 Rule 16b-3 means Rule 16b-3, as promulgated by the Commission in
Release No. 34-28869 under Section 16(b) of the Exchange Act, effective May 1,
1991, or any successor rule as amended from time to time.
1.17 Securities Broker means the registered securities broker
acceptable to the Company who agrees to effect the cashless exercise of an
Option pursuant to Section 7.03 hereof.
1.18 Subsidiary means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations in the chain (other than the last corporation) owns stock
possessing at least 50 percent of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
Article II
PURPOSE
This Plan is intended to associate the interests of the Non-Employee
Directors with those of the Company and its shareholders through increased
equity ownership, to assist the Company in recruiting and retaining individuals
of ability and experience who are not employed by the Company to serve on the
Board and its committees and to provide incentive to those individuals by
enabling them to participate in the future success of the Company.
Article III
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have all the powers vested in it by the terms of the Plan, such powers to
include the authority (within the limitations described herein) to prescribe the
form of the Agreements evidencing Grants under the terms of this Plan. The
Committee shall, subject to the provisions of the Plan, have the power to
construe the Plan, to determine all questions arising thereunder and to adopt
and amend such rules and regulations for the administration of the Plan as it
may deem desirable, consistent with the provisions of the Plan. Any decision of
the Committee in the administration of the Plan, as described herein, shall be
final and conclusive. The Committee may act only by a majority of its members in
office, except that the members thereof may authorize any one or more of their
number or the Secretary or any other officer of the Company to execute and
deliver documents on behalf of the Committee. No member of the Committee shall
be liable for anything done or omitted to be done by such member or by any other
member of the Committee in connection with the Plan, except in circumstances
involving actual bad faith. All costs and expenses of administering the Plan
shall be borne by the Company.
Article IV
GRANTS OF OPTIONS
Every Non-Employee Director who serves on the Board during the term of
the Plan is eligible to receive Grants. Each Non-Employee Director serving on
the Board as of the effective date of this Plan shall be granted an Option on
such date. Every Non-Employee Director who continues to serve in such capacity
on the date which is the first business day following each Annual Meeting of
Shareholders during the term of this Plan shall be granted an Option on each
such date. Each Option shall be for the purchase by the Participant of 1,000
shares of Common Stock at a price per share equal to the Fair Market Value of a
share of the Common Stock on the date of the Grant. Each Option shall be
evidenced by an Agreement issued by the Committee in the form prescribed by the
Committee and consistent with the terms of this Plan.
Article V
AMOUNT OF STOCK
The total number of shares of Common Stock reserved and available for
issuance upon exercise of Options granted under the Plan shall be 100,000
shares, subject to adjustment as provided in Article VIII below. The Common
Stock to be issued may be either authorized and unissued shares, issued shares
acquired by the Company or its Subsidiaries or any combination thereof. In the
event that an Option is terminated, in whole or in part, for any reason other
than its exercise, the number of shares of Common Stock allocated to such Option
or terminated portion thereof may be reallocated to other Options to be granted
under this Plan. In the event that the number of shares of Common Stock
available for future Grants under the Plan is insufficient to make all automatic
Grants required to be made on such date, then all Non-Employee Directors shall
share ratably in the number of Options available for Grants under the Plan.
Article VI
EXERCISE OF OPTIONS
6.01 Exercisability. Each Option shall be first exercisable on the date
which is six months from the date of the grant of the Option and shall continue
to be exercisable for a term of ten years thereafter; provided however, that:
(i) subject to the six month exercisability requirement set forth above, an
Option shall be exercisable, in the event of a Participant's death prior to
exercising the Option, by his estate, or the person or persons to whom his
rights under the Option shall pass by will or the laws of descent and
distribution but only for a period of two years from the date of the
Participant's death or during the remainder of the period preceding the
expiration of the Option, whichever is shorter; (ii) subject to the six month
exercisability requirement set forth above, an Option shall be exercisable, if a
Participant becomes permanently and totally disabled (within the meaning of
Section 105(d)(4) of the Code) while serving on the Board prior to exercising
the Option, but only for a period of two years from the date on which he ceases
serving on the Board due to such disability or during the remainder of the
period preceding the expiration of the Option, whichever is shorter; and (iii)
subject to the six month exercisability requirement set forth above, in the
event that a Participant resigns from or is not re-elected or does not stand for
re-election to the Board or in any other circumstance approved by the Board in
its sole discretion, an Option shall be exercisable but only for a period of two
years following the date of his resignation or cessation of service on the
Board, or in the period prescribed by the Board in an approved circumstance, or
during the remainder of the period preceding the expiration of the Option,
whichever is shorter.
6.02 Transferability. Any Option granted hereunder will be
nontransferable and, accordingly, shall not be assignable, alienable, salable or
otherwise transferable by any Participant, unless the Participant's Agreement,
as determined in the discretion of the Committee, expressly authorizes all or a
portion of the Options to be granted to the Participant on terms which permit
transfer by such Participant to (i) the spouse, children or grandchildren of the
Participant ("Immediately Family Members"), (ii) a trust or trusts for the
exclusive benefit of such Immediately Family Members, or (iii) a partnership in
which such Immediate Family Members are the only partners, provided that (x)
there may be no consideration for any such transfer, (y) the Agreement pursuant
to which Options are granted must be approved by the Committee and must
expressly provide for transferability in a manner consistent with this Article,
and (z) subsequent transfers of transferred Options shall be prohibited except
those transferred by will or the laws of descent and distribution. Following
transfer, any such Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that for
purposes of this Article VI, the term Participant shall be deemed to refer to
the transferee. The events of resignation from or cessation of Board service of
this Article shall continue to be applied with respect to the original
Participant to whom the Option was granted, following which the Option shall be
exercisable by the transferee only to the extent, and for the period specified
in this Article VI.
Article VII
MANNER OF EXERCISE
7.01 Exercise. Subject to the provisions of Article VI, an Option may
be exercised in whole at any time or in part from time to time. An Option
granted under this Plan may be exercised with respect to any number of whole
shares less than the full number for which the Option could be exercised. Such
partial exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan with respect to remaining shares
subject to the Option.
7.02 Payment. Payment of the Option Price may be made in cash or by
surrendering previously-owned shares of Common Stock to the Company, provided
the shares surrendered have a Fair Market Value (determined as of the day
preceding the date of exercise) that is not less than such Option Price or part
thereof.
7.03 Cashless Exercise. To the extent permitted under applicable laws
and regulations, at the request of the Participant, the Company will cooperate
in a "cashless exercise" of an Option. The cashless exercise shall be effected
by the Participant delivering to the Securities Broker instructions to exercise
all or part of the Option, including instructions to sell a sufficient number of
shares of Common Stock to cover the costs and expenses associated therewith.
7.04 Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to shares subject to an Option until the date he
exercises such Option.
Article VIII
ADJUSTMENT UPON CHANGE IN COMMON STOCK
Should the Company effect one or more (x) stock dividends, stock
split-ups, subdivisions or consolidations of shares or other similar changes in
capitalization; (y) spin-offs, spin-outs, split-ups, split-offs, or other such
distribution of assets to shareholders; or (z) direct or indirect assumptions
and/or conversions of outstanding options due to an acquisition of the Company,
then the maximum number of shares as to which Grants may be issued under this
Plan and the number and price of shares of Common Stock subject to Grants shall
be proportionately adjusted, and the terms of Options shall be adjusted, as the
Committee shall determine to be equitably required to retain for the
Participants the equivalent economic benefit of their Option(s). Any
determination made under this Article VIII by the Committee shall be final and
conclusive.
The issuance by the Company of shares of Common Stock or securities
convertible into shares of Common Stock, for cash or property or for labor or
services, either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to any Grant.
Article IX
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements, if any) and the rules of all domestic stock exchanges on which the
Company's shares may be listed. The Company may rely on an opinion of its
counsel as to such compliance. Any share certificate issued to evidence Common
Stock for which an Option is exercised may bear such legends and statements as
the Committee may deem advisable to assure compliance with federal and state
laws and regulations. No Grant shall be exercisable, no Common Stock shall be
issued, and no certificate for shares shall be delivered until the Company has
obtained such consent or approval as the Committee may deem advisable from
regulatory bodies having jurisdiction over such matters.
Article X
GENERAL PROVISIONS
10.01 Rules of Construction. Headings are given to the articles and
sections of this Plan for ease of reference. The reference to any statute,
regulation, or other provision of law shall be construed to refer to any
amendment to or successor of such provision of law.
10.02 Amendment. The Board may amend or terminate this Plan from time
to time; provided, however, that the Board may amend no more often than once
every six months and no amendment may become effective until shareholder
approval is obtained if the amendment would increase the number of shares that
may be issued hereunder pursuant to Options, increase the benefits to
Participants under the Plan, or change the requirements as to eligibility for
participation in the Plan. No amendment shall, without a Participant's consent,
adversely affect any rights of such Participant under any Grant outstanding at
the time such amendment is made except if such an amendment is made to cause the
Plan or a Grant to qualify for the Rule 16b-3 exemption. No amendment shall be
made if it would disqualify the Plan from the exemption provided by Rule 16b-3.
10.03 No Right. Neither the Plan nor any action taken hereunder shall
be construed as giving any Non-Employee Director any right to be retained in the
service of the Company.
10.04 Unfunded Plan. The Plan shall be unfunded. The Company shall not
be required to establish any special or separate fund or to make any other
segregation of assets to assure the issuance of shares upon exercise of any
Option under the Plan and issuance of shares upon exercise of Options shall be
subordinated to the claims of the Company's general creditors.
10.05 Acceptance. By accepting any Option or other benefit under the
Plan, each Participant and each person claiming under or through such person
shall be conclusively deemed to have indicated his acceptance and ratification
of, and consent to, any action taken under the Plan by the Company or the Board.
10.06 Rule 16b-3 Compliance. It is the intention of the Company that
the Plan comply in all respects with Rule 16b-3, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3. The Board may
adopt rules and regulations under, and amend, the Plan in furtherance of the
intent of the foregoing.
10.07 Term of Plan. No Grant may be issued under this Plan before the
effective date of the Plan or after the first business day following the 2004
Annual Meeting of Shareholders (the "Termination Date"). Grants issued on or
before the Termination Date shall remain valid in accordance with their terms.
10.08 Effective Date. This Amended and Restated Plan has been approved
by the Board of Directors of the Company, effective as of December 3, 1998.
Exhibit 10.2
UNIVERSAL CORPORATION
AMENDMENT TO NON-EMPLOYEE DIRECTOR
NON-QUALIFIED STOCK OPTION AGREEMENT(S)
THIS AMENDMENT dated as of December 3, 1998, between UNIVERSAL
CORPORATION, a Virginia corporation (the "Company"), and <<F1>> (the
"Optionee"), is made pursuant and subject to the provisions of the Company's
Amended and Restated 1994 Stock Option Plan for Non-Employee Directors (the
"Plan"). All terms used herein that are defined in the Plan have the same
meanings given them in the Plan.
1. Grant of Option. Company and Optionee have entered into
Non-Qualified Stock Option Agreements providing for the grant of Options under
the Plan on the day following the Company's annual meeting of Shareholders in
each of the following years: <<F2>> (collectively, the "Existing Agreements").
2. Amendment. The parties desire to amend Section 2(e) of each of the
Existing Agreements by deleting it in its entirety and replacing it with the
following new Section 2(e):
(e) Limited Transferability. The Optionee shall have the right
to transfer this option, in whole or in part, to (i) the
spouse, children or grandchildren of the Optionee
("Immediately Family Members"), (ii) a trust or trusts for the
exclusive benefit of such Immediately Family Members, or (iii)
a partnership in which such Immediate Family Members are the
only partners, provided that (y) there may be no consideration
for any such transfer and (z) subsequent transfers of this
option once transferred shall be prohibited except transfers
made by will or the laws of descent and distribution, subject
to the terms hereof. Following transfer, this option shall
continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that
for purposes of this Section 2, the term Optionee shall be
deemed to refer to the transferee. The events of resignation
from or cessation of Board service of this Agreement shall
continue to be applied with respect to the original Optionee
to whom this option was granted, following which the option
shall be exercisable by the transferee only to the extent, and
for the period specified in this Section 2 (e).
3. Unless specifically amended herein, all other provisions of the
Existing Agreements shall remain unchanged and in full force and effect.
4. This Amendment shall be construed, in force and administered in
accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Company has caused this Amendment to be signed
by a duly authorized officer, and the Optionee has affixed his or her signature
hereto.
UNIVERSAL CORPORATION OPTIONEE
By: __________________________ _____________________________
Exhibit 10.3
FIRST AMENDMENT
TO THE
UNIVERSAL LEAF TOBACCO COMPANY, INCORPORATED
BENEFIT RESTORATION PLAN TRUST
WHEREAS, effective June 25, 1997, UNIVERSAL LEAF TOBACCO COMPANY,
INCORPORATED, a Virginia corporation (the "Company") established the Universal
Leaf Tobacco Company, Incorporated Benefit Restoration Plan Trust (the "Trust")
in conjunction with the agreement of WACHOVIA BANK, N.A., a national banking
association (the "Trustee"), to serve as the Trust's initial trustee;
WHEREAS, Section 13 of the Trust provides for the amendment of the
Trust by the Company and the Trustee;
WHEREAS, the Company and the Trustee have agreed to modify the terms of
Section 6 of the Trust governing investment authority to provide, among other
things, that prior to a Change of Control, as defined under the Trust, the
Company shall direct the investment of the assets of the Trust;
NOW THEREFORE, effective January 12, 1999, Section 6 of the Trust is
amended and restated in its entirety as follows:
Section 6. Investment Authority
(a) The Trustee shall not be liable in discharging its duties hereunder,
including without limitations its duty to invest and reinvest the
assets of the Trust (collectively, the "Trust Fund"), if it acts for
the exclusive benefit of the participants and their beneficiaries, in
good faith and as a prudent person would act in accomplishing a similar
task and in accordance with the terms of this Trust Agreement and any
applicable federal or state laws, rules or regulations.
(b) Subject to investment guidelines agreed to in writing from time to time
by the Company and the Trustee prior to a Change of Control, the
Trustee shall have the power in investing and reinvesting the Trust
Fund in its sole discretion:
(1) To invest and reinvest in any readily marketable common and
preferred stocks, bonds, notes, debentures (including
convertible stocks and securities but not including any stock
or security of the Trustee other than a de minimis amount held
in a collective or mutual fund), certificates of deposit or
demand or time deposits (including any such deposits with the
Trustee) and shares of investment companies and mutual funds,
without being limited to the classes or property in which the
Trustees are authorized to invest by any law or any rule of
court of any state and without regard to the proportion any
such property may bear to the entire amount of the Trust Fund;
(2) To invest and reinvest all or any portion of the Trust Fund
collectively through the medium of any proprietary mutual fund
that may be established and maintained by the Trustee;
(3) To commingle for investment purposes all or any portion of the
Trust Fund with assets of any other similar trust or trusts
established by the Company with the Trustee for the purpose of
safeguarding deferred compensation or retirement income
benefits of its employees and/or directors;
(4) To retain any property at any time received by the Trustee;
(5) To sell or exchange any property held by it at public or
private sale, for cash or on credit, to grant and exercise
options for the purchase or exchange thereof, to exercise all
conversion or subscription rights pertaining to any such
property and to enter into any covenant or agreement to
purchase any property in the future;
(6) To participate in any plan of reorganization, consolidation,
merger, combination, liquidation or other similar plan
relating to property held by it and to consent to or oppose
any such plan or any actions thereunder or any contract,
lease, mortgage, purchase, sale or other action by any person;
(7) To deposit any property held by it with any protective,
reorganization or similar committee, to delegate discretionary
power thereto, and to pay part of the expenses and
compensation thereof any assessments levied with respect to
any such property to deposited;
(8) To extend the time of payment of any obligation held by it;
(9) To hold uninvested any moneys received by it, without
liability for interest thereon, but only in anticipation of
payments due for investments, reinvestments, expenses or
disbursements;
(10) To exercise all voting or other rights with respect to any
property held by it and to grant proxies, discretionary or
otherwise;
(11) For the purposes of the Trust, to borrow money from others, to
issue its promissory note or notes therefor, and to secure the
repayment thereof by pledging any property held by it;
(12) To employ suitable contractors and counsel, who may be counsel
to the Company or to the Trustee, and to pay their reasonable
expenses and compensation from the Trust Fund to the extent
not paid by the Company;
(13) To register investment in its own name or in the name of a
nominee; to hold any investment in bearer form; and to combine
certificates representing securities with certificates of the
same issue held by it in other fiduciary capacities or to
deposit or to arrange for the deposit of such securities with
any depository, even though, when so deposited, such
securities may be held in the name of the nominee of such
depository with other securities deposited therewith by other
persons, or to deposit or to arrange for the deposit of any
securities issued or guaranteed by the United States
government, or any agency or instrumentality thereof,
including securities evidenced by book entries rather than by
certificates, with the United States Department of the
Treasury or a Federal Reserve Bank, even though, when so
deposited, such securities may not be held separate from
securities deposited therein by other persons; provided,
however, that no securities held in the Trust Fund shall be
deposited with the United States Department of the Treasury or
a Federal Reserve Bank or other depository in the same account
as any individual property of the Trustee, and provided,
further, that the books and records of the Trustee shall at
all times show that all such securities are part of the Trust
Fund;
(14) To settle, compromise or submit to arbitration any claims,
debts or damages due or owing to or from the Trust,
respectively, to commence or defend suits or legal proceedings
to protect any interest of the Trust, and to represent the
Trust in all suits or legal proceedings in any court or before
any other body or tribunal; provided, however, that the
Trustee shall not be required to take any such action unless
it shall have been indemnified by the Company to its
reasonable satisfaction against liability or expenses it might
incur therefrom;
(15) To hold and retain policies of life insurance, annuity
contracts, and other property of any kind which policies are
contributed to the Trust by the Company or any subsidiary of
the Company or are purchased by the Trustee provided, however,
that the exercise by the Trustee of any incidents of ownership
under any contract shall, prior to a Change of Control, be
subject to the direction of the Company. After a Change of
Control, the Trustee shall have all such rights;
(16) To hold any other class of assets which may be contributed by
the Company and that is deemed reasonable by the Trustee,
unless expressly prohibited herein;
(17) To loan any securities at any time held by it to brokers or
dealers upon such security as may be deemed advisable, and
during the terms of any such loan to permit the loaned
securities to be transferred into the name of and voted by the
borrower or others; and
(18) Generally, to do all acts, whether or not expressly
authorized, that the Trustee may deem necessary or desirable
for the protection of the Trust.
(c) Prior to a Change of Control, the Company shall have the right, subject
to this Section to direct the Trustee with respect to investments.
(1) The Company may at any time direct the Trustee to segregate
all or a portion of the Trust Fund in a separate investment
account or accounts and may appoint one or more investment
managers and/or an investment committee established by the
Company to direct the investment and reinvestment of each such
investment account or accounts. In such event, the Company
shall notify the Trustee of the appointment of each such
investment manager and/or investment committee. No such
investment manager shall be related, directly or indirectly,
to the Company. No members of the investment committee may be
employees of the Company.
(2) Thereafter, the Trustee shall make every sale or investment
with respect to such investment account as directed in writing
by the investment manager or investment committee. It shall be
the duty of the Trustee to act strictly in accordance with
each direction. The Trustee shall be under no duty to question
any such direction of the investment manager or investment
committee, to review any securities or other property held in
such investment account or accounts acquired by it pursuant to
such directions or to make any recommendations to the
investment managers or investment committee with respect to
such securities or other property.
(3) Notwithstanding the foregoing, the Trustee, without obtaining
prior approval or direction from an investment manager or
investment committee, shall invest cash balances held by it
from time to time in short term cash equivalents including,
but not limited to, through the medium of any short term
common, collective or commingled trust fund established and
maintained by the Trustee subject to the instrument
establishing such trust fund, U.S. Treasury Bills, commercial
paper (including such forms of commercial paper as may be
available through the Trustee's Trust Department),
certificates of deposit (including certificates issued by the
Trustee in its separate corporate capacity), and similar type
securities, with a maturity not to exceed one year; and
furthermore, sell such short term investments as may be
necessary to carry out the instructions of an investment
manager or investment committee regarding more permanent type
investment and directed distributions.
(4) The Trustee shall neither be liable nor responsible for any
loss resulting to the Trust Fund by reason of any sale or
purchase of an investment directed by an investment manager or
investment committee nor by reason of the failure to take any
action with respect to any investment which was acquired
pursuant to any such direction in the absence of further
directions of such investment manager or investment committee.
(5) Notwithstanding anything in this Agreement to the contrary,
the Trustee shall be indemnified and saved harmless by the
Company from and against any and all personal liability to
which the Trustee may be subjected by carrying out any
directions of an investment manager or investment committee
issued pursuant hereto or for failure to act in the absence of
directions of the investment manager or investment committee
including all expenses reasonably incurred in its defense in
the event the Company fails to provide such defense; provided,
however, the Trustee shall not be so indemnified if it
participants knowingly in, or knowingly undertakes to conceal,
an act or omission of an investment manager or investment
committee, having actual knowledge that such act or omission
is a breach of a fiduciary duty; provided further, however,
that the Trustee shall not be deemed to have knowingly
participated in or knowingly undertaken to conceal an act or
omission of an investment manager or investment committee with
knowledge that such act or omission was a breach of fiduciary
duty by merely complying with directions of an investment
manager or investment committee or for failure to act in the
absence of directions of an investment manager or investment
committee. The Trustee may rely upon any order, certificate,
notice, direction or other documentary confirmation purporting
to have been issued by the investment manager or investment
committee which the Trustee believes to be genuine and to have
been issued by the investment manager or investment committee.
The Trustee shall not be charged with knowledge of the
termination of the appointment of any investment manager or
investment committee until it received written notice thereon
from the Company.
(d) Following a Change of Control, the Trustee shall have the sole and
absolute discretion in the management of the Trust assets and shall
have all the powers set forth under Section 6(b). In investing the
Trust assets, the Trustee shall consider:
(1) the needs of the Plan;
(2) the need for matching of the Trust assets with the liabilities
of the Plan; and
(3) the duty of the Trustee to act solely in the best interests of the
participants and their beneficiaries.
(e) The Trustee shall have the right, in its sole discretion, to delegate
its investment responsibility to an investment manager who may be an
affiliate of the Trustee. In the event the Trustee shall exercise this
right, the Trustee shall remain, at all times responsible for the acts
of an investment manager. The Trustee shall have the right to purchase
an insurance policy or an annuity to fund the benefits of the
Arrangements.
(f) The Company shall have the right at any time, and from time to time in
its sole discretion, to substitute assets of equal fair market value
for any asset held by the Trust Fund. This right is exercisable by the
Company in a nonfiduciary capacity without the approval or consent of
any person in a fiduciary capacity.
The remaining provisions of the Trust are ratified and remain in full
force and effect.
UNIVERSAL LEAF TOBACCO COMPANY,
INCORPORATED
By: ___________________________
Title: ____________________________
Date: _____________________________
WACHOVIA BANK, N.A.
By: ___________________________
Title: ____________________________
Date: _____________________________
Exhibit 10.4
UNIVERSAL CORPORATION
NON-EMPLOYEE DIRECTOR RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, dated this __th day of ________, ____, between
Universal Corporation, a Virginia corporation (the "Company") and
____________________ (the "Director"), is made pursuant and subject to the
provisions of the Company's 1997 Executive Stock Plan, which is incorporated
herein by reference, and any future amendments thereto (the "Plan"). All terms
used herein that are defined in the Plan shall have the same meanings given them
in the Plan.
1. Award of Restricted Stock. Pursuant to the Plan, the Company on this
date awards to the Director, subject to the terms and conditions of the Plan and
subject further to the terms and conditions set forth herein, 700 shares of
Restricted Stock. Such number of shares of Restricted Stock shall be
proportionately adjusted for any increase or decrease in the total number of
shares of Common Stock outstanding resulting from a subdivision or consolidation
of shares or the payment of a dividend entirely in shares of Common Stock, a
stock split-up or any other increase or decrease in the number of shares of
Common Stock outstanding without the receipt by the Company of cash, property,
or labor or services.
2. Terms and Conditions. This award of Restricted Stock is subject to
the following terms and conditions:
A. Restricted Period. This award of Restricted Stock shall be
subject to the restrictions set forth herein for a period (the "Restricted
Period") commencing on the date of this Agreement and ending with the earliest
of the following events:
(1) the Director retires from the Board in
compliance with the Board's retirement policy as
then in effect;
(2) the Director's service on the Board terminates
as a result of not being nominated for
reelection by the Board (other than at the
Director's request);
(3) the Director's service on the Board terminates
because the Director, although nominated for
reelection by the Board, is not reelected by the
Company's shareholders;
(4) the Director becomes Disabled (as defined
below);
(5) the Director dies; or
(6) the occurrence of a Change of Control.
A Director shall be deemed "Disabled" if the Director is
unable to perform his or her customary duties on the Board for a period of six
months or longer due to bodily injury or disease.
B. Forfeiture of Restricted Stock. If the date ("Termination Date")
a Director's service on the Board terminates is before the end of the Restricted
Period, the Director shall forfeit and return to the Company the shares of
Restricted Stock awarded hereunder.
C. Restrictions. The shares of Restricted Stock awarded hereunder
and any stock distributions with respect to such Restricted Stock shall be
subject to the following restrictions during the Restricted Period:
(1) the Restricted Stock shall be subject to
forfeiture as provided herein;
(2) the Restricted Stock may not be sold, assigned,
transferred, pledged, hypothecated or otherwise
disposed of, and neither the right to receive
the Restricted Stock nor any interest hereunder
may be assigned by the Director, and any
attempted assignment shall be void;
(3) A certificate representing the shares of
Restricted Stock awarded hereunder shall be held
in escrow by the Company and shall, in the
Company's sole discretion, bear an appropriate
restrictive legend and be subject to appropriate
"stop transfer" orders. To facilitate the escrow
of the shares of Restricted Stock awarded
hereunder with the Company, the Director shall
deliver herewith the Stock Power attached hereto
as Exhibit I executed in blank by the Director
and dated as of the date hereof;
(4) Any additional stock or other securities or
property that may be issued or distributed with
respect to the Restricted Stock awarded
hereunder as a result of any stock dividend,
stock split, business combination or other event
shall be subject to the restrictions and other
terms and conditions set forth in this
Agreement; and
(5) The Director shall not be entitled to receive
any shares of the Restricted Stock awarded
hereunder prior to the completion of any
registration or qualification of the Restricted
Stock under any federal or state law, or the
receipt thereof may be subject to such
restrictions to insure compliance with the same
as the Company, in its sole discretion,
determines to be necessary or advisable.
D. Receipt of Common Stock. If the Director's Termination Date is
at or after the end of the Restricted Period, the Director shall receive the
number of shares of restricted Common Stock awarded hereunder, free and clear of
the restrictions set forth in this Agreement, except for any restrictions
necessary to comply with federal and state securities laws. Certificates
representing such shares shall be released to the Director as promptly as
practical following the Director's becoming entitled to receive such shares.
E. Shareholder Rights. Upon issuance of a certificate representing
the shares of Restricted Stock awarded hereunder, the Director shall, subject to
the restrictions set forth herein, have all rights of a shareholder with respect
to such shares of Restricted Stock, including the right to vote such shares and
the right to receive cash dividends and other distributions thereon.
F. Tax Withholding. The Director shall pay to the Company in cash
(or provide for the payment of) the full amount of all federal and state income
and employment taxes required to be withheld by the Company in respect to the
inclusion in the taxable income of the Director of any amount with respect to
the shares of Restricted Stock awarded hereunder.
3. No Right to Renomination. Nothing in this Agreement shall confer
upon the Director any right to be renominated to the Board.
4. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive law of the Commonwealth of Virginia,
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the law of any other jurisdiction.
5. Investment Representation. The Director agrees that unless such
shares previously have been registered under the Securities Act of 1933, (i) any
shares of Restricted Stock awarded hereunder will be acquired for investment and
not with a view to distribution or resale and (ii) until such registration,
certificates representing such shares may bear an appropriate legend to assure
compliance with such Act. This investment representation shall terminate when
such shares have been registered under the Securities Act of 1933 or the
requirements of such Act have otherwise been satisfied.
6. Director Bound by Plan. The Director hereby acknowledges receipt of
a copy of the Plan and agrees to be bound by all the terms and provisions
thereof.
7. Conflicts. In the event of any conflict between the provisions of
the Plan as in effect on the date hereof and the provisions of this Agreement,
the provisions of the Plan shall govern. All references herein to the Plan shall
mean the Plan as in effect on the date hereof.
8. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the legatees, distributees, and personal representatives of the
Director and the successors of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
by a duly authorized officer, and the Director has affixed his or her signature
hereto.
UNIVERSAL CORPORATION DIRECTOR
By: _________________________ __________________________
Title: _________________________
0380093.03
<PAGE>
EXHIBIT I
STOCK POWER
FOR VALUE RECEIVED, pursuant to a certain Restricted Stock Agreement
between Universal Corporation and the undersigned dated ___________________ __,
19__, I hereby sell, assign and transfer unto Universal Corporation all shares
of the restricted Common Stock of Universal Corporation awarded to me on this
date and in the future under said Agreement and do hereby irrevocably constitute
and appoint _____________________________________ as my attorney-in-fact to
transfer the said shares of stock on the books of Universal Corporation with
full power of substitution in the premises.
Dated ______________ __, 19__.
------------------------------------
Director
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000102037
<NAME> UNIVERSAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 80,479
<SECURITIES> 0
<RECEIVABLES> 375,783
<ALLOWANCES> 0
<INVENTORY> 871,128
<CURRENT-ASSETS> 1,480,069
<PP&E> 767,187
<DEPRECIATION> 407,905
<TOTAL-ASSETS> 2,147,818
<CURRENT-LIABILITIES> 1,197,914
<BONDS> 240,881
<COMMON> 78,673
0
0
<OTHER-SE> 472,466
<TOTAL-LIABILITY-AND-EQUITY> 2,147,818
<SALES> 2,177,004
<TOTAL-REVENUES> 2,177,004
<CGS> 1,871,888
<TOTAL-COSTS> 1,871,888
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,688
<INCOME-PRETAX> 114,226
<INCOME-TAX> 42,264
<INCOME-CONTINUING> 68,481
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,481
<EPS-PRIMARY> 2.02
<EPS-DILUTED> 2.01
</TABLE>
