Exhibit 10.17
UNIVERSAL CORPORATION
1994 STOCK OPTION AND EQUITY ACCUMULATION AGREEMENT
THIS AGREEMENT, dated this 1st day of December 1994, between
Universal Corporation, a Virginia corporation ("the Company") and
____________ (the "Optionee"), is made pursuant and subject to the
provisions of the Company's 1989 Executive Stock Plan, as amended, 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. Grant of Long Term Option and Reload Options. Pursuant
to the Plan, and upon action taken by the Executive Compensation
Committee (the "Committee") of the Board of Directors of the Company on
December 1, 1994, the Company grants to the Optionee, subject to the
terms and conditions of the Plan and subject further to the terms and
conditions set forth herein, the right and option to purchase __________
shares of Common Stock (the "Long Term Option") and the Reload Options
as described in subparagraph 5E. The Long Term Option and Reload
Options are non-qualified stock options. The option price of the Long
Term Option shall be the Fair Market Value of Common Stock at the close
of business on December 1, 1994, or $21.50 per share.
2. Expiration Date. The expiration date of the Long Term
Option and any Reload Options granted hereunder shall be December 1,
2004 (the "Expiration Date").
3. Date Options Become Exercisable. Any Option granted
hereunder may not be exercised until at least six months after the date
of grant thereof.
4. Eligibility to Participate. In order to participate and
receive the Options granted under this Agreement, the Optionee must sign
and return a copy of this Agreement by January 31, 1995.
5. Automatic Exercise Program.
A. Method of Automatic Exercise. Until the
Automatic Exercise Program terminates as provided in subparagraph 5G,
the Optionee authorizes the Company on any Automatic Exercise Date (as
hereinafter defined), including the Initial Exercise Date (as
hereinafter defined), automatically to exercise the lowest price Long
Term or Reload Options granted the Optionee under this Agreement only by
means of a stock-for-stock swap using shares of Common Stock then
credited to the Optionee's Account (as hereinafter defined). On the
Initial Exercise Date, such Options shall be automatically exercised to
purchase the number of shares of Common Stock which can be purchased
from shares of Common Stock credited to the Optionee's Account. With
respect to subsequent Automatic Exercise Dates, the Optionee authorizes
the Company to automatically exercise such Options for the amount of
shares of Common Stock which can be purchased from shares of Common
Stock held in the Optionee's Account received on previous Automatic
Exercise Dates and shares of Common Stock, if any, contributed to
Optionee's Account pursuant to subparagraph 5D, less the number of
shares, if any, sold for payment of taxes under subparagraph 5F. The
automatic exercise shall only occur if the Fair Market Value on the
Automatic Exercise Date exceeds by one percent (1%) or more the exercise
price of the lowest priced Option held by the Optionee under this
Program (the "Automatic Exercise Criterion"). The Optionee grants the
Company or any of its officers the power of attorney to endorse and
transfer the share certificates credited to the Optionee's
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Account in accordance with the Automatic Exercise Program. The power of
attorney shall cease upon the termination of the Optionee's
participation in the Automatic Exercise Program.
B. Other Options Granted by Universal to the
Optionee. Options granted to the Optionee under agreements other than
this Agreement or the Universal Corporation 1991 Stock Option and Equity
Accumulation Agreement (the "1991 Agreement") are not eligible to be
included in the Automatic Exercise Program under this Agreement and the
1991 Agreement.
C. Automatic Exercise Dates; Amendment of 1991
Agreement. The initial automatic exercise date under the Automatic
Exercise Program for Options granted under this Agreement shall be June
1, 1995, or the first business day thereafter on which the Automatic
Exercise Criterion is met (the "Initial Exercise Date"), and subsequent
automatic exercise dates for such Options shall occur upon the first
business day on which the New York Stock Exchange trades stock which
occurs after a six month interval has elapsed since the last such
automatic exercise date, or the first business day thereafter on which
the Automatic Exercise Criterion is met (the "Automatic Exercise
Date(s)"); provided, however, that any Automatic Exercise Date for
Options granted under this Agreement or the 1991 Agreement shall be at
least six months after the last Automatic Exercise Date for any such
Options. Subparagraph 5C of the 1991 Agreement is amended to read as
follows:
C. The initial automatic exercise date under the Automatic
Exercise Program shall be November 1, 1992, or the first
business day thereafter on which the Automatic Exercise
Criterion is met (the "Initial Exercise Date"), and
subsequent automatic exercise dates shall occur upon the
first business day on which the New York Stock Exchange
trades stock which occurs after a six month interval has
elapsed since the last automatic exercise date, or the first
business day thereafter on which the Automatic Exercise
Criterion is met (the "Automatic Exercise Date(s)");
provided, however, that any Automatic Exercise Date for
Options granted
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under this Agreement or the Universal Corporation 1994 Stock
Option and Equity Accumulation Agreement shall be at least
six months after the last Automatic Exercise Date for any
such Options.
D. Method of Payment Under Automatic Exercise
Program. Other than the payment on the Initial Exercise Date from shares
of Common Stock then credited to the Optionee's Account pursuant to the
1991 Agreement, payment by the Optionee under the Automatic Exercise
Program shall be only from shares of Common Stock received from the
previous exercise under the Program and from additional shares of Common
Stock delivered to Optionee's Account as provided in this subparagraph
5D.
Prior to termination of the Automatic Exercise Program as
provided in subparagraph 5G, the Optionee may elect to deliver
additional shares of Common Stock to the Company for credit to
the Optionee's Account for inclusion in the Program, provided
that the total number of all shares contributed by the Optionee
shall not exceed the maximum number of shares of Common Stock
specified in paragraph 4 of the 1991 Agreement. Such additional
shares may be delivered from time-to-time during the term of the
Program. However, for purposes of the Program, the delivery of
shares shall be made at least six (6) months prior to the
Automatic Exercise Date on which such shares shall be used for a
stock swap pursuant to the Program.
E. Reload Options. Only participants in the
Automatic Exercise Program will be eligible to receive Reload Options.
A Reload Option is an automatic grant of a new Option each time the
Company executes an automatic stock-for-stock swap exercise. The number
of shares granted in the Reload Option shall equal the number of shares
exchanged in payment of the exercise price on an Automatic Exercise
Date. The Reload Options will be fully vested six (6) months from the
date of grant and will have a term which expires on the same date as the
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Long Term Option. The exercise price for a Reload Option shall be the
Fair Market Value on the date of the Reload Option grant.
The grant of a Reload Option shall be subject to there being
sufficient shares available for such grants under the Plan. If
there are not sufficient shares available to fully meet the
obligation of the Automatic Exercise Program as described above,
then the Committee will, in its sole discretion, allocate the
available shares to participants. In addition, should the
Committee, in its sole discretion, determine that continuing to
grant Reload Options is no longer in the best interest of the
Company, it may, by means of written notice to participants,
cause the discontinuance of the granting of Reload Options.
F. Payment of Taxes Under the Automatic Exercise
Program. On the date seven (7) days after an Automatic Exercise Date,
unless at least six (6) months prior to such Automatic Exercise Date the
Optionee has given written notice to the Company, directed to the
attention of its Secretary, that he or she will pay the Company, on a
timely basis, cash for the payment of withholding taxes on the gain
realized from the exercise of the Option, the Company shall deliver from
the Optionee's Account to the broker hereinafter designated by the
Optionee, free of all restrictions, the number of whole shares of Common
Stock which best approximates the amount of such taxes. For purposes of
the preceding sentence, the Optionee designates Shearson Lehman
Brothers, Inc., Three James Center, 1051 East Cary Street, Richmond,
Virginia 23219, Account No. ____________, as his or her broker and
authorizes and directs the Company to deliver such shares to said broker
and the broker to sell the shares and remit the proceeds to the Company
for the payment of withholding taxes.
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G. Termination of the Automatic Exercise Program.
The Automatic Exercise Program shall terminate upon the earlier of (i)
the date on which the Optionee gives written notice to the Company that
he or she irrevocably elects to terminate participation in such Program,
provided that such notice may not be given before the second business
day after the Initial Exercise Date; or (ii) the date Optionee's
employment with the Company is terminated; or (iii) the failure by the
Company to be in a position to grant Reload Options on any Automatic
Exercise Date pursuant to subparagraph 5E in which case the Company
shall promptly notify the Optionee.
H. Restriction on Sales and Encumbrance of Shares.
During the Optionee's participation in the Automatic Exercise Program,
the Optionee agrees that unless otherwise permitted by the Committee in
its sole discretion, (i) shares of Common Stock contributed to or
received by and on behalf of the Optionee pursuant to the Program and
(ii) shares of Common Stock representing the after-tax gain on each
automatic exercise, rounded to the nearest whole share, shall be held in
the Optionee's Account and shall not be available for sale, transfer,
pledge, hypothecation or other disposition except for tax obligations as
provided in subparagraph 5F above, and for stock-for-stock Option
exercises pursuant to this paragraph 5. All shares of Common Stock held
in the Optionee's Account shall be owned by and registered in the name
of the Optionee, and the Optionee shall have all rights of ownership
with respect thereto, including voting rights and the right to receive
dividends. Such shares shall be held by the Company and a legend on the
stock certificate(s) shall note the restrictions. The restrictions on
the shares of Common Stock held in the Optionee's Account shall lapse
upon termination of the Automatic Exercise Program as provided in
subparagraph 5G.
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I. Maintenance of Shares. The Company shall
establish and maintain an individual account in the Optionee's name (the
"Optionee's Account") to hold shares of Common Stock registered in the
Optionee's name contributed to or obtained through the Automatic
Exercise Program under this Agreement and the 1991 Agreement. The
Company shall deliver a written report to the Optionee on the status of
the Optionee's Account following each Automatic Exercise Date. Upon
termination of the Automatic Exercise Program as provided in
subparagraph 5G, all shares of Common Stock held in the Optionee's
Account shall be delivered to the Optionee free of all restrictions.
6. Nonautomatic Exercises by the Optionee.
A. Subject to Automatic Exercise Program
Termination. Except for exercises under the Automatic Exercise Program
as provided in paragraph 5, the Optionee shall not be able to exercise
the Long Term and Reload Options until the earlier of (i) the date the
Program terminates as provided in subparagraph 5G or (ii) the date one
(1) year prior to the Expiration Date. On such date, such Options that
have vested pursuant to paragraph 3 and that have not been previously
exercised under the Automatic Exercise Program may be exercised in the
manner provided in this paragraph 6.
B. Nonautomatic Exercises. After termination of
the Automatic Exercise Program in accordance with subparagraphs 5G(ii)
or (iii), or on the date one (1) year prior to the Expiration Date, all
vested and unexercised Long Term and Reload options shall continue to be
exercisable by the Optionee until the earlier of the termination of the
Optionee's rights hereunder pursuant to subparagraphs 6E and 6F, or the
Expiration Date. A partial exercise of such Options pursuant to
subparagraphs 6E or 6F shall not affect Optionee's right to exercise
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such Options with respect to the remaining shares, subject to the six
month vesting period set forth in paragraph 3 and the conditions of the
Plan and this Agreement. If the Optionee terminates the Automatic
Exercise Program pursuant to subparagraph 5G(i), such Options may only
be exercised in the manner provided in subparagraph 6H.
C. Method of Exercising and Payment for Shares. An
Option exercised pursuant to this paragraph 6 shall be exercised by
written notice of the Optionee delivered to the attention to the
Company's Secretary at the Company's principal office in Richmond,
Virginia. The written notice shall specify the number of shares being
acquired pursuant to the exercise of the Option when such Option is
being exercised in part pursuant to subparagraphs 6E or 6F. The
exercise date shall be the date such notice is received by the Company.
Such notice shall be accompanied by payment in full of the Option Price
for each share of Common Stock to be purchased.
D. Cashless Exercise. To the extent permitted
under the applicable laws and regulations, at the request of the
Optionee, the Company agrees to cooperate in a "cashless exercise" of a
Long Term or Reload Option pursuant to this paragraph 6. The cashless
exercise shall be effected by the Optionee 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.
E. Exercise During Employment. Subject to (i) the
provisions of subparagraph 6F which shall apply to exercise in the event
of retirement, death, disability or Committee approval, and (ii) the
provisions of subparagraph 6H which shall apply to exercise in the event
Optionee terminates his or her participation in the Automatic Exercise
Program as
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provided in subparagraph 5G(i), all vested and unexercised
Long Term and Reload Options may be exercised in whole or in part during
Optionee's employment with the Company or an Affiliate from the date
such Options are exercisable pursuant to subparagraph 6B until the
earlier of the expiration of ninety (90) days from the date the
Optionee's employment with the Company or an Affiliate is terminated or
the Expiration Date; provided, however, that the Optionee's right to
exercise the Options shall terminate immediately in the event the
Optionee's employment with the Company or an Affiliate is terminated for
cause as hereinafter defined or the Optionee is in violation of the
provisions of paragraph 7 hereof. For purposes of the preceding
sentence, the Optionee's employment shall be deemed to have been
terminated for cause if the Optionee's employment is terminated as
result of fraud, dishonesty or embezzlement from the Company or an
Affiliate.
F. Exercise in the Event of Retirement, Death, or
Disability or Approval by the Committee. Subject to the provisions of
subparagraph 6H which shall apply to exercise in the event the Optionee
terminates his or her participation in the Automatic Exercise Program as
provided in subparagraph 5G(i), all unexercised Long Term and Reload
Options that have vested pursuant to paragraph 3 shall be exercisable in
whole or in part in the event that prior to the Expiration Date (i) the
Optionee retires (early, after age 55, normal, at age 65, or delayed)
or, (ii) the Optionee dies or becomes permanently and totally disabled
(as defined in the Disability Benefits Plan of Universal Leaf Tobacco
Company, Incorporated and Domestic Subsidiaries) while employed by the
Company or an Affiliate or (iii) for any reason approved by the
Committee in its absolute discretion. In the event of death, such
Options may be exercised by the Optionee's estate, or the person or
persons to whom his or her rights under this Agreement
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shall pass by will or the laws of descent and distribution. Such
Options will continue to be exercisable for (x) the two-year period
beginning on the date the Optionee retires, dies or terminates
employment due to permanent and total disability, as the case may be, or
the date of Committee approval as provided in subparagraph (iii) of this
subparagraph 6F, or (y) the remainder of the period preceding the
Expiration Date, whichever is shorter.
G. Exercise in the Event of Liquidation or
Reorganization. In the event of a dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not the
surviving corporation, the Optionee shall have the right immediately
prior to such dissolution or liquidation, or merger or consolidation, to
exercise all unexercised Long Term and Reload Options in full.
H. Exercise in the Event the Optionee Terminates
Automatic Exercise Program. In the event the Optionee irrevocably
elects to terminate his or her participation in the Automatic Exercise
Program as provided in subparagraph 5G(i), Optionee may (i) exercise
all, but not a part, of all unexercised Long Term and Reload Options
which have vested pursuant to paragraph 3 for a period of thirty (30)
days from the date the Optionee gives written notice as provided in
subparagraph 5G(i), (ii) exercise unexercised Reload Options which have
not vested pursuant to paragraph 3 for a period of thirty (30) days from
the date each such Option vests, (iii) exercise all vested and
unexercised Long Term and Reload Options in whole or in part during the
one (1) year period prior to the Expiration Date, and (iv) exercise all
vested and unexercised Long Term and Reload Options in whole or in part
pursuant to subparagraph 6F. An exercise pursuant to subparagraph
6H(iii) may only be made during the Optionee's employment with the
Company or an Affiliate.
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I. Payment of Withholding Taxes. Within seven (7)
days following the date of exercise pursuant to this paragraph 6, the
Optionee shall pay to the Company in cash (or provide for the payment
of) the withholding taxes on the gain realized from the exercise of the
Option.
7. Optionee Covenants. The Optionee recognizes that over a
period of many years the Company and its Affiliates (including any
predecessors or entities from which it might have acquired goodwill)
have developed, at considerable expense, relationships with customers
and prospective customers which constitute a major part of the value of
the goodwill of the Company and the Affiliates. During the course of
his or her employment by the Company, the Optionee will have substantial
contact with these customers and prospective customers. In order to
protect the goodwill of the Company's and the Affiliates' businesses,
the Optionee covenants and agrees that, in the event of the termination
of his or her employment, whether voluntary or involuntary, he or she
shall forfeit the Options granted under this Agreement if he or she
directly or indirectly as an owner, shareholder, director, employee,
partner, agent, broker, consultant or other participant, for the period
during which such Options are exercisable:
(a) calls upon or causes to be called upon, or solicits or assists in
the solicitation of any person, firm, association, or corporation,
listed as a customer of the Company or any Affiliate on the date of
termination of the Optionee's employment, for the purpose of selling,
renting or supplying any product or service competitive with the
products or services of the Company or any
Affiliate; or
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(b) performs or contracts to perform for a competitor of the Company or
any Affiliate the same or similar services he or she performed for
the Company or such Affiliate.
Subparagraphs (a) and (b) of this paragraph 7 are separate and
divisible covenants; if for any reason any one covenant is held to be
invalid or unenforceable, in whole or in part, the same shall not be
held to affect the validity or enforceability of the others, or of any
other provision of this Agreement. The period and scope of the
restrictions set forth in this paragraph 7 shall be reduced to the
maximum permitted by the law actually applied to determine the validity
of each subparagraph.
8. Fractional Shares. Fractional shares shall not be
issuable hereunder, and when any provision hereof may entitle the
Optionee to a fractional share such fraction shall be disregarded.
9. No Right to Continued Employment. This Agreement does
not confer upon the Optionee any right with respect to continuance of
employment by the Company or an Affiliate, nor shall it interfere in any
way with the right of the Company or an Affiliate to terminate his or
her employment at any time.
10. Investment Representation. The Optionee agrees that
unless such shares previously have been registered under the Securities
Act of 1933 (i) any shares of Common Stock purchased by him or her
hereunder will be purchased 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.
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11. Administration and Interpretation. The Plan
Administrator shall be the Company; however this Agreement shall be
operated under the supervision and authority of the Committee. The
Committee shall have the authority to terminate the Automatic Exercise
Program and the issuance of any Reload Options. Also, the Committee may
issue additional Reload Options and Long Term Options under this
Agreement if authorized by the Plan or any amendment thereto, or any
successor plan. Any interpretation of this Agreement shall be made by
the Committee. Any amendment to this Agreement must be authorized by
the Committee.
12. Change in Capital Structure. Subject to any required
action by the shareholders of the Company, the number of shares of
Common Stock covered by the Long Term and Reload Options, and the price
per share thereof, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company
resulting from a subdivision or consolidation of shares or the payment
of a stock dividend (but only on the Common Stock), a stock split-up or
any other increase or decrease in the number of such shares effected
without receipt of cash or property or labor or services by the Company.
Subject to any required action by the shareholders of the
Company, if the Company shall be the surviving corporation in any merger
or consolidation, the Long-Term and Reload Options shall pertain to and
apply to the securities to which a holder of the number of shares of
Common Stock subject to such Options would have been entitled. A
dissolution or liquidation of the Company or a merger or consolidation
in which the Company is not the surviving corporation, shall cause such
Options to terminate, provided that the Optionee shall, in such event,
have the right immediately prior to such dissolution or liquidation, or
merger or consolidation in which the Company is not the surviving
corporation, to exercise such Options.
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In the event of a change in the Common Stock of the Company as
presently constituted, which is limited to a change of all of its
authorized shares without par value into the same number of shares with
a different par value, the shares resulting from any such change shall
be deemed to be the Common Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding
and conclusive.
Except as hereinbefore expressly provided in this paragraph 12,
the Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of shares
of stock of any class or by reason of any dissolution, liquidation,
merger, or consolidation or spin-off of assets or stock of another
corporation, and any issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to the
Options granted under this Agreement.
The grant of the Long Term and Reload Options pursuant to this
Agreement shall not affect in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business
or assets.
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the Commonwealth
of Virginia, except to the extent that federal law shall be deemed to
apply.
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14. 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.
15. Optionee Bound by Plan. The Optionee hereby
acknowledges receipt of a copy of the Plan and agrees to be bound by all
the terms and provisions thereof.
16. Binding Effect. Subject to the limitations stated
herein and in the Plan, this Agreement shall be binding upon and inure
to the benefit of the legatees, distributees, and personal
representatives of the Optionee and the successors of the Company.
17. Nontransferability. The Long Term and Reload Options
granted under this Agreement shall be nontransferable except by will or
by the laws of descent and distribution. During the Optionee's
lifetime, such Options may be exercised only by the Optionee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
signed by a duly authorized officer, and the Optionee has affixed his or
her signature hereto.
UNIVERSAL CORPORATION OPTIONEE
By: _________________________ _________________________
[Name]
Title:________________________
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