Exhibit 10.38
UNIVERSAL CORPORATION
2002 NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of December 5, 2002, between Universal Corporation,
a corporation organized under the laws of Virginia (the "Company"), and
______________ (the "Optionee"), is made pursuant and subject to the provisions
of the Company's 2002 Executive Stock Plan, which is incorporated herein by
reference, and any future amendments thereto (the "Plan"). Capitalized terms not
otherwise defined herein have the meanings given them in the Plan.
1. Grant of Option. Pursuant to the Plan, the Company, on December 5, 2002,
granted to the Optionee, subject to the terms and conditions of the Plan and
subject further to the terms and conditions herein set forth, the right and
option to purchase from the Company all or any part of an aggregate of ______
shares of common stock of the Company ("Common Stock") at the option price of
$35.67 per share. Such option will be exercisable as hereinafter provided.
2. Terms and Conditions. This option is subject to the following terms and
conditions:
(a) Expiration Date. The Expiration Date of this option is December 5,
2012.
(b) Exercise of Option. Except as provided in paragraphs 4 and 5, this
option shall be exercisable, with respect to one-third (1/3) of the
total number of shares of Common Stock covered by this option, as
set forth in paragraph 1 above, for each full 12 month period after
the date hereof and each anniversary of such date, up to a total of
three (3) such periods, that the Optionee continues to be employed
by the Company or an Affiliate after the date of the granting of
this option. Once this option has become exercisable with respect
to a particular number of shares in accordance with the preceding
sentence, it shall continue to be exercisable with
respect to such shares until the earlier of (i) termination of the
Optionee's rights hereunder pursuant to paragraph 3 or (ii) the
Expiration Date. A partial exercise of this option shall not affect
the Optionee's right to exercise this option subsequently with respect
to the remaining shares that are exercisable subject to the conditions
of the Plan and this Agreement.
(c) Method of Exercising and Payment for Shares. This option shall be
exercised by written notice delivered to the attention of 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 in accordance with subparagraph 2(b) hereof.
The exercise date shall be the date specified in such notice or, if no
date is specified, the date such notice is otherwise received by the
Company. Such notice shall provide for or be accompanied by payment of
the option price in full for each share of Common Stock being acquired
pursuant to such exercise, in cash or cash equivalent acceptable to
the Committee, by the surrender (by physical delivery or attestation)
of mature shares of Common Stock (shares held by the Optionee for at
least six months or as otherwise required by applicable laws and
regulations) with a Fair Market Value at the time of exercise equal to
the option price or by any combination of cash or acceptable cash
equivalent and Common Stock having an aggregate Fair Market Value
equal to the option price.
(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 the option pursuant to this
paragraph 2. The cashless exercise shall be effected by the Optionee
delivering to the Securities Broker instructions to exercise all or
part of the option, including
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instructions to sell a sufficient number of shares of Common Stock to
cover the costs and expenses associated therewith.
(e) Payment of Withholding Taxes. Unless the Optionee pays to the Company
in cash (or provides for the payment of) the withholding taxes on the
gain realized from the exercise of the Option prior to or at the time
of the date of exercise, the Company shall (i) withhold from the
shares of Common Stock issuable to the Optionee upon such exercise
only the number of whole shares of Common Stock which on such exercise
date best approximates but does not exceed the minimum statutory
amount of taxes required to be withheld by the Company and (ii)
immediately after such exercise deliver to the Securities Broker, free
of all restrictions, the number of whole shares of Common Stock, from
the shares issued upon exercise, which best approximates the amount of
taxes to be withheld in excess of the minimum statutory amount
required to be withheld by the Company. The Optionee authorizes and
directs the Company to deliver such shares to the Securities Broker
and authorizes and directs the Securities Broker to sell the shares
and remit the proceeds to the Company for the payment of withholding
taxes.
(f) Nontransferability. The Option granted under this Agreement shall be
nontransferable except by will or by the laws of descent and
distribution; provided, however, that the Optionee shall be entitled,
in the manner provided in subparagraph 2(f) hereof, to designate a
beneficiary to exercise his or her rights, and to receive any shares
of Common Stock issuable, with respect to such Option upon the death
of the Optionee. The Option may be exercised during the lifetime of
the Optionee only by the Optionee or, if permitted by applicable law,
the Optionee's guardian or legal representative.
(g) Designation of Beneficiary. The Optionee may designate a beneficiary
by completing a beneficiary designation form approved by the Committee
and
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delivering the completed designation form to the Human Resources
Department of the Company. The person who is the Optionee's named
beneficiary at the time of his or her death (herein referred to
as the "Beneficiary") shall be entitled to exercise the Option,
to the extent it is exercisable, after the death of the Optionee.
The Optionee may from time to time revoke or change his or her
Beneficiary without the consent of any prior Beneficiary by
filing a new designation with the Human Resources Department of
the Company. The last such designation received by the Company
shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received
by the Company prior to the Optionee's death, and in no event
shall any designation be effective as of a date prior to such
receipt. If the Committee is in doubt as to the right of any
person to exercise the Option, the Company may refuse to
recognize such exercise, without liability for any interest or
dividends thereon, until the Committee determines the person
entitled to exercise such Option, which determination shall be
final and conclusive.
3. Exercise During Employment. Subject to the vesting periods set forth in
subparagraph 2(b), this option may not be exercised in whole or in part after
the earlier of (i) the date ninety days after the date the Optionee terminates
his or her employment with the Company or an Affiliate or (ii) the Expiration
Date; provided, however, that the Optionee's right to exercise this option 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 paragraph 6 hereof. For purposes of the preceding sentence, the
Optionee's
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employment shall be deemed to have been terminated for cause if the Optionee's
employment is terminated as a result of fraud, dishonesty or embezzlement from
the Company or an Affiliate.
4. Exercise in the Event of Retirement, Death, Disability. Notwithstanding
the vesting requirement set forth in subparagraph 2(b), this option shall become
exercisable in full in the event that prior to the Expiration Date of this
option the Optionee (i) retires (early, after age 55, normal, at age 65, or
delayed retirement) or for any reason approved by the Committee in its absolute
discretion or, (ii) dies or becomes totally and permanently disabled (as defined
below) while employed by the Company or an Affiliate. In the event of death this
option may be exercised by the Optionee's estate, or the person or persons to
whom his or her rights under this option shall pass by will or the laws of
descent and distribution. For purposes of this Agreement, "totally and
permanently disabled" shall mean the incapacity of the Optionee by reason of
bodily injury or disease which prevents the Optionee from performing the
customary duties of his or her position with the Company or an Affiliate,
provided such disability can be expected to continue for a lifetime. Options
that become exercisable pursuant to this paragraph 4 will continue to be
exercisable for the remainder of the period preceding the Expiration Date.
5. 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 his or her option in full.
6. Optionee Covenants. The Optionee recognizes that over a period of many
years the Company and its Affiliates (including any predecessors or entities
from which they 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 its Affiliates.
During the course of his or her employment by the Company, the
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Optionee will have substantial contact with these customers and prospective
customers. In order to protect the goodwill of the Company's and the Affiliate's
businesses, the Optionee covenants and agrees that, in the event of the
termination of his or her employment, whether voluntary or involuntary, he shall
forfeit the option if he directly or indirectly as an owner, shareholder,
director, employee, partner, agent, broker, consultant or other participant, for
the period during which the option is 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 of its Affiliates 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 of its
Affiliates; or
(b) performs for a competitor of the Company the same or
similar services he or she performed for the Company.
Subparagraphs (a) and (b) 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 provision of this Agreement. The period and scope of the
restrictions set forth in this paragraph shall be reduced to the maximum
permitted by the law actually applied to determine the validity of each
subparagraph.
7. 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.
8. No Right to Continued Employment. This option 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.
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9. Investment Representation. The Optionee agrees that unless such shares
previously have been registered under the Securities Act of 1933 (i) any shares
purchased by him 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.
10. Change in Capital Structure. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
this option, 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, this
option shall pertain to and apply to the securities to which a holder of the
number of shares of Common Stock subject to this option 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
this option 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
this option.
In the event of a change in the Common Stock of the Company as presently
constituted, which is limited to a change of all of its authorized shares with
par value into the same number of shares with a different par value or without
par value, the shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of the Plan.
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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 10, 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 this option.
The grant of the option pursuant to the Plan 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.
11. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of Virginia.
12. 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.
13. 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.
14. Binding Effect. Subject to the limitations stated above 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.
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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: _________________________________ _____________________________
Title:________________________________ [Name]
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UNIVERSAL CORPORATION
Schedule of Grants to Executive Officers
Optionees Options Awarded
--------- ---------------
J. M. M. van xx Xxxxxx 52,500
X. X. Xxxxxxx 19,500
Mr. van xx Xxxxxx'x options expire five years from the date of grant
(instead of 10 years) and are exercisable immediately after grant (instead of
three-year ratable vesting).
Xx. Xxxxxxx'x options vest ratably over three years unless such options are
to be exercised in connection with his entrance into the Registrant's Career
Equity Ownership Program.
