-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J7vZMO3y7fW3fZqyF6kHw2o7tmwVYbbzKF28DNe3MAHWw4deZ2wxlVxTTdpvVvDK hJm0Z5JVhfMlRcnCeL/GLg== 0000916641-98-001176.txt : 19981110 0000916641-98-001176.hdr.sgml : 19981110 ACCESSION NUMBER: 0000916641-98-001176 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL CORP /VA/ CENTRAL INDEX KEY: 0000102037 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-FARM PRODUCT RAW MATERIALS [5150] IRS NUMBER: 540414210 STATE OF INCORPORATION: VA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00652 FILM NUMBER: 98741017 BUSINESS ADDRESS: STREET 1: P O BOX 25099 STREET 2: 1501 N HAMILTON ST CITY: RICHMOND STATE: VA ZIP: 23230 BUSINESS PHONE: 8043599311 MAIL ADDRESS: STREET 1: PO BOX 25099 CITY: RICHMOND STATE: VA ZIP: 23260 FORMER COMPANY: FORMER CONFORMED NAME: UNIVERSAL LEAF TOBACCO CO INC DATE OF NAME CHANGE: 19880314 10-Q 1 FIRST QUARTER REPORT 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 September 30, 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 ------------------------------------------------------ (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 ---------------------------------------------- ----- (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 --------- --------- 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 - 33,665,806 shares outstanding as of November 6, 1998 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Universal Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS Three Months Ended September 30, 1998 and 1997 (In thousands of dollars, except per share data)
September 30, September 30, 1998 1997 Sales and other operating revenues $ 879,285 $1,023,156 Costs and expenses Cost of goods sold 742,701 880,921 Selling, general and administrative expenses 78,314 78,437 -------------------------------------------- Operating income 58,270 63,798 Equity in pretax earnings of unconsolidated affiliates 570 3,745 Interest expense (15,542) (13,802) -------------------------------------------- Income before income taxes and other items 43,298 53,741 Income taxes 16,021 21,306 Minority interests 220 (338) -------------------------------------------- -------------------------------------------- Net income $ 27,057 $ 32,773 ============================================================================================================== -------------------------------------------- Earnings per share $ .79 $ .93 ============================================================================================================== -------------------------------------------- Diluted earnings per share $ .78 $ .93 ============================================================================================================== Retained earnings - Beginning of period 526,715 424,298 Net income 27,057 32,773 Cash dividends declared ($.28 - 1998; $.265 - 1997) (9,448) (9,312) -------------------------------------------- Retained earnings - End of period 544,324 447,759 -------------------------------------------- 3 Universal Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (In thousands of dollars) September 30, June 30, 1998 1998 -------------------- ---------------------- ASSETS Current Cash and cash equivalents $ 87,621 $ 79,835 Accounts receivable 396,013 392,821 Advances to suppliers 83,003 104,439 Accounts receivable - unconsolidated affiliates 11,582 49,343 Inventories - at lower of cost or market: Tobacco 603,616 541,822 Lumber and building products 91,820 97,071 Agri-products 76,086 89,990 Other 29,095 33,162 Prepaid income taxes 6,613 18,347 Deferred income taxes 4,175 3,794 Other current assets 18,181 19,665 ------------------------------------------------- Total current assets 1,407,805 1,430,289 Property, plant and equipment - at cost Land 30,216 29,951 Buildings 230,023 219,594 Machinery and equipment 476,437 466,177 ------------------------------------------------- 736,676 715,722 Less accumulated depreciation 395,089 385,967 ------------------------------------------------- 341,587 329,755 Other assets Goodwill 119,987 120,889 Other intangibles 19,522 18,586 Investments in unconsolidated affiliates 87,121 87,052 Other noncurrent assets 74,037 70,134 ------------------------------------------------- 300,667 296,661 ------------------------------------------------- $2,050,059 $2,056,705 ========================================================================================================================= See accompanying notes. 4 Universal Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (In thousands of dollars) September 30, June 30, 1998 1998 -------------------- ---------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Notes payable and overdrafts $ 543,424 $ 586,450 Accounts payable 250,081 285,994 Accounts payable - unconsolidated affiliates 12,101 17,116 Customer advances and deposits 255,099 125,311 Accrued compensation 18,019 24,706 Income taxes payable 19,727 27,693 Current portion of long-term obligations 30,678 34,251 ------------------------------------------------- Total current liabilities 1,129,129 1,101,521 Long-term obligations 246,675 263,140 Postretirement benefits other than pensions 44,219 44,535 Other long-term liabilities 46,232 40,909 Deferred income taxes 20,275 27,065 Minority interests 31,833 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 33,875,606 shares (34,866,406 at June 30, 1998) 26,250 61,544 Retained earnings 544,324 526,715 Accumulated other comprehensive income (38,878) (40,392) ------------------------------------------------- Total shareholders' equity 531,696 547,867 ------------------------------------------------- $ 2,050,059 $ 2,056,705 ========================================================================================================================== See accompanying notes. 5 Universal Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended September 30, 1998 and 1997 (In thousands of dollars) September 30, September 30, 1998 1997 -------------------- -------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $27,057 $ 32,773 Adjustments to reconcile net income to net cash provided by operating activities 5,600 15,400 Changes in operating assets and liabilities net of effects from purchase of businesses 105,929 (1,641) ---------------------------------------------- Net cash provided by operating activities 138,586 46,532 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (20,000) (13,100) ---------------------------------------------- Net cash used in investing activities (20,000) (13,100) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of short-term debt, net (43,000) (15,600) Repayment of long-term debt (23,000) (20,000) Purchases of common stock (35,300) Dividends paid (9,500) (9,300) ---------------------------------------------- Net cash used in financing activities (110,800) (44,900) ---------------------------------------------- Net increase (decrease) in cash and cash equivalents 7,786 (11,468) Cash and cash equivalents at beginning of year 79,835 109,070 -------------------- -------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 87,621 $ 97,602 ===================================================================================================================
6 Universal Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1998 All figures contained herein are unaudited. 1) The operations of domestic and foreign tobacco, lumber and building products, and agri-products segments are seasonal. Therefore, the results of operations for the three-month period ended September 30, 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 September 30, 1998, total exposure under guarantees issued for banking facilities of unconsolidated affiliates was approximately $10 million. Other contingent liabilities approximate $45 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 $50 million. 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 an material adverse effect on the Company's consolidated financial position or results of operations. 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. Three months ended September 30, 1998 1997 -------------- -------------- (in thousands of dollars) Net income $27,057 $32,773 Foreign currency translation adjustment 1,514 (6,887) -------------- -------------- Comprehensive income $28,571 $25,886 ============== ============== 7 4) The following table sets forth the computation of earnings per share and diluted earnings per share. Three months ended September 30, 1998 1997 ------------- -------------- Net income (in thousands of dollars) $27,057 $32,773 ------------- -------------- Denominator for earnings per share: Weighted average shares 34,391,290 35,139,137 Effect of dilutive securities: Employee stock options 92,553 190,460 ------------- -------------- Denominator for diluted earnings per share 34,483,843 35,329,597 Earnings per share $.79 $.93 ============= ============== Diluted earnings per share $.78 $.93 ============= ============== 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. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - ------------------------------- Working capital at September 30 was $279 million compared to $329 million at June 30, 1998. The decline in working capital was due to a combination of lower current assets, which were down $22 million, and an increase in current liabilities of $27 million. The working capital accounts fluctuate between September and June primarily due to seasonality. In the U.S., tobacco working capital needs are normally at their lowest point at June 30. In the first quarter of the fiscal year, the U.S. flue-cured tobacco markets open and tobacco is purchased and shipped to factories for processing. Inventories generally rise with increases in the total of notes payable and/or customer advances. The mix of notes payable and customer advances is dependent on both the Company's and its customers' borrowing capabilities, interest rates and exchange rates. The Company does not purchase material quantities of tobacco in the United States on a speculative basis; thus the increase in inventory represents tobacco that has been committed to customers. 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. 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 buyback plan announced in May 1998. In the first quarter of fiscal 1999, the Company purchased a total of 992 thousand shares for $35.3 million. Cumulative share purchases as of November 6, 1998 were 1.7 million shares for $64.9 million. The liquidity and capital resources of the Company at September 30, 1998 remain adequate to support the Company's foreseeable operating needs. Results of Operations - --------------------- 'Sales and Other Operating Revenues' decreased $144 million or 14% in the quarter. Tobacco revenues decreased by $135 million in the quarter due to lower green tobacco costs in Brazil and Africa and the timing of shipments in the U.S., Africa and dark tobacco operations. Revenues for lumber and building products and agri-products were each down less than 4% in the quarter. Gross profit (revenues less cost of sales) in the quarter decreased 4% to $137 million principally due to lower results in tobacco operations. A number of operating regions results were lower due to shipment timing, which resulted from some customer shipments made in the fourth quarter of last year instead of the current year's first quarter. U.S. tobacco volumes bought and processed in the quarter were down slightly compared to last year and, in the prior year, there were more shipments of old crop tobacco. In addition, gross margins in Argentina were negatively impacted by the quality of the crop. Brazilian operations benefited from a higher proportion of the smaller 1998 crop shipped in the first quarter of fiscal 1999. Lumber and building product gross margins remain under pressure on comparable sale volumes and lower prices. Agri-products gross profits were up principally on improved tea results. Interest expense increased in the quarter due a change in the method of funding working capital in Brazil. The Company's estimated effective tax rate in fiscal year 1999 is approximately 37% compared to 40% in the first quarter last year. The decline compared to last year's estimated rate in the quarter is due to the anticipated mix of foreign and domestic earnings and management's current assessment of pending and contested tax issues. 9 The outlook for the balance of the year remains good, although timing issues as well as variations in the relative earnings contributions of the company's operating territories could still affect quarterly comparisons. Higher tobacco earnings should be recorded in the United States and Africa reflecting larger volumes expected in both areas. However, the U.S. burley crop has been affected by dry weather in recent weeks and both quantity and quality of the crop are uncertain at this time. On the other hand, Brazilian results should be somewhat lower because of the significant declines in last year's flue-cured and burley crops due to excessive rains. Dark tobacco earnings will also be down for the year, due to lower leaf prices resulting from a surplus of certain types of cigar leaf and the impact of heavy rains in Indonesia which have significantly reduced cigar wrapper yields and leaf quality. Wrapper tobacco continues to be in short supply. Improved results are expected from Universal's lumber and building products operations in the Netherlands as prices appear to be stabilizing, particularly for softwood, and recent dollar/guilder exchange rate developments have been favorable. At the same time, concerns are beginning to be expressed that the problems in Asia, the former Soviet Union and Latin America could lead to an economic slow down in Europe in the months ahead, which could affect lumber usage. Agri-products are expected to do well for the year. Since the Company's last report, the world economic situation has continued to deteriorate, which has the possibility of impacting numerous businesses, including the tobacco merchant business. However, at this writing prospects remain good for the remainder of the year and management is optimistic that earnings from continuing operations in the range of $3.70 to $3.90 per share can be achieved. 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 the Company's contingency plan regarding the year 2000 issue, each operating region has begun identifying potential risk areas and the probability of a disruption to business operations. As of September 30, 1998, the Company had spent approximately $5 million of the $5.7 million estimated cost to address the Y2K problem. The Company does not expect the total cost of becoming Y2K compliant with respect to its internal technology 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. 10 PART II. OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders The Company held its annual meeting of its shareholders on October 27, 1998 to elect three directors to serve three-year terms each and one director to serve a two-year term, and to increase the number of authorized shares of the Company's common stock. The names of the four directors and the number of votes cast for each of them are list below: Name of Director Votes For Votes Withheld ---------------- --------- -------------- Joseph C. Farrell (two-year term) 28,456,712 161,466 Charles H. Foster, Jr. (three-year term) 28,964,664 153,514 Allen B. King (three-year term) 28,916,049 202,129 Jeremiah J. Sheehan (three-year term) 28,956,183 161,995 The directors whose terms continued after the meeting are William W. Berry, Dr. Ronald E. Carrier, Lawrence S. Eagleburger, Henry H. Harrell, Richard G. Holder, and Hubert R. Stallard. The number of shares voted as follows for the increase of authorized shares of the Company's common stock: For Abstained Against --- --------- ------- 26,455,208 2,507,402 155,568 Item 6. Exhibits and Reports on Form 8-K a. Exhibits -------- 10.32 Amended and Restated Universal Corporation Outside Directors' Deferred Income Plan dated as of October 1, 1998.* 10.33 Amended and Restated Universal Leaf Tobacco Company, Incorporated 1994 Deferred Income Plan dated as of July 1, 1998.* 12 Statements Regarding Computation of Ratio of Earnings to Fixed Charges.* 27 Financial Data Schedule.* b. Reports on Form 8-K ------------------- (i) The Company filed a current Report on Form 8-K on September 8, 1998 describing the receipt of a subpoena from the Philadelphia Office of the Antitrust Division of the U.S. Department of Justice. (ii) The Company filed a current Report on Form 8-K on August 10, 1998 announcing the Company's earnings for its fiscal year ended June 30, 1998. * Filed Herewith 11 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: November 9, 1998 UNIVERSAL CORPORATION --------------------------------------------- (Registrant) /s/ Hartwell H. Roper --------------------------------------------- Hartwell H. Roper, Vice President and Chief Financial Officer /s/ William J. Coronado --------------------------------------------- William J. Coronado, Controller (Principal Accounting Officer) EX-10.32 2 OUTSIDE DIRECTORS' DEFERRED INCOME PLAN EXHIBIT 10.32 UNIVERSAL CORPORATION OUTSIDE DIRECTORS' DEFERRED INCOME PLAN Universal Leaf Tobacco Company, Incorporated (the "Company") hereby restates, effective as October 1, 1998, the Outside Directors' 1994 Deferred Income Plan, with the plan restated as the Universal Corporation Outside Directors' Deferred Income Plan (the "Plan"). The Plan is and shall remain, unless later amended, a non-qualified deferred compensation program for the non-employee directors of Universal Corporation (the "Outside Directors"). The following shall constitute the terms and conditions of the restated Plan, effective as of October 1, 1998, unless as otherwise provided. A. Purpose and Administration 1. Statement of Purpose. The purpose of the Plan is to provide the Outside Directors with recurrent opportunities to defer receipt of a portion of their compensation as directors. Such deferrals, until a selected date certain in the future, would apply to amounts which otherwise would be payable currently. 2. Top Hat Plan. The Company intends that the Plan constitute an unfunded "top hat" plan, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended from time to time ("ERISA"), and the rules and regulations thereunder, maintained for the purpose of providing deferred compensation to the Outside Directors. This plan shall not cover any person who is, or otherwise becomes, an employee of the Company or its affiliated entities. 3. Plan Administration. Full discretionary power and authority to construe, interpret and administer the Plan, and to change requirements for eligibility and investment options, shall be vested in the Executive Committee of the Company (the "Committee"). The Committee shall have the discretionary authority to make determinations provided for, or permitted to be made, under the Plan and to establish such rules and regulations, if any, that the Committee deems necessary and appropriate for the ongoing administration and operation of the Plan. B. Eligibility 1. Eligible Persons. Participants in this plan shall consist solely of the Outside Directors (individually or collectively sometimes referred to herein as "Participant or Participants"). C. Deferral Elections 1. Agreements. The initial deferral agreement (the "Initial Agreement"), in the form approved by the Committee (the initial version of the form is attached to the Plan as Exhibit A), shall be executed by the Company and each Participant to effectuate the deferrals described in Section 6(a) below. Subsequent deferral agreements (the "Subsequent Agreements"), in the form otherwise approved by the Committee, shall be executed by the Company and each Participant, to effectuate the deferrals described in Section 6(b) below (the Initial Agreement and the Subsequent Agreements are collectively referred to herein as the "Deferral Agreements"). Execution of a Deferral Agreement between the Company and each Participant shall constitute the sole means for each Participant to effectuate deferral elections of compensation under the Plan. For purposes of the Plan, "compensation" shall mean any Universal Corporation Director's fees, including retainers and fees for Board and committee meetings (herein the "Compensation"). 2. Deferral Elections. (a) Initial Deferral. Each Participant eligible in 1994 could elect in writing to defer an amount of Compensation, up to a maximum of one hundred percent (100%) of Compensation, for the Plan's initial deferral period of October 1, 1994 through September 30, 1995 (the "Initial Deferral Period" ). (b) Subsequent Deferrals. Each Participant may elect in writing to defer an amount of Compensation, up to a maximum of one hundred percent (100%) of such Compensation, for the October 1 to September 30 Plan Year next following such deferral election (the "Subsequent Deferral Period"). The election with respect to Compensation for the Subsequent Deferral Period shall be made in the month of September prior to the October 1 beginning of the next Plan Year and Subsequent Deferral Period. (c) New Participant Deferrals. Notwithstanding the September 30 deadline for deferral elections by existing Outside Directors, any new Outside Director who is first eligible to participate in the Plan subsequent to the beginning of a Plan Year and Subsequent Deferral Period may elect to defer Compensation under the Plan for such Deferral Period, by filing an election with the Company within thirty (30) days from the date on which such Outside Director first becomes eligible to participate in the Plan. If such new Outside Director elects not to participate for such Deferral Period, such Director may nevertheless elect to defer Compensation for the next Subsequent Deferral Period (beginning the next following October 1) during the next regular September deferral election period. D. Deferral Accounts 1. Deferral Account. The Company shall establish a deferral account in the name of each Participant on its books and records which shall reflect, with respect to each Plan Year, the amount of actual deferrals, and any earnings and less any losses thereon (the "Adjustment") - as described in Section 3 hereinafter - as an unfunded liability of the Company to the Participant (such actual deferral, plus or minus the Adjustment, is collectively referred to herein as the "Deferral Account"). 2. Irrevocability of Deferral Elections. Once a Participant elects to defer Compensation pursuant to the terms of a deferral agreement, including elections as to the amount and the timing and method of payment, such election shall be irrevocably binding upon the Participant. 3. Investment Options. The Company has selected the following investment funds for Participant designation under the Plan, which may be modified from time to time by the Committee: The Oppenheimer Capital Appreciation Fund; The Oppenheimer Global Securities Fund; The Massachusetts Mutual Equity Fund; The Massachusetts Mutual Bond Fund; The Massachusetts Mutual Money Market Fund; The Dreyfus Stock Index Fund; and The UVV Stock Index Fund. The above funds, including any changes or additions thereto, shall be referred to individually or collectively as an "Investment Option" or the "Investment Options". Each Participant shall designate how each Deferral Account (deferrals for a particular year) are to be hypothetically invested among the Investment Options. The Company shall use the Participant's Investment Option designations to calculate the Adjustment component of each Deferral Account. The Participant may each change his or her investment election designation each month, with regard to future contributions and current Deferral Accounts (either by calling 1-800-999-6808 or by submitting an investment allocation form), except as provided below. If a Participant changes his or her Investment Option designation for either amounts then in a Deferral Account or future contributions to be allocated to a Deferral Account, then (except as provided below) such change shall supersede the previous designation for such Account, effective as of the first day of the month following the date of such changed election. The Company shall begin crediting the Participant's Deferral Account with an amount deferred by the Participant on the last day of the month in which such Compensation otherwise would have been paid to such Participant. Further, as to any amount later distributed from the Plan, the Company shall cease crediting or debiting Adjustments to the Participant's Deferral Account on the last day of the month of the applicable distribution as otherwise determined under Section E (herein the "Valuation Date"). Notwithstanding any provisions hereof to the contrary, if a Participant elects to hypothetically invest any portion of his or her Compensation in the UVV Stock Index Fund, then the Company shall credit the Participant's Deferral Account with the number of deferred stock units that are equal to 1) the amount then to be invested in the UVV Stock Index Fund divided by the fair market value of Universal Corporation common stock on the last day of the month in which the related Compensation otherwise would have been paid to such Participant. Then, until the later distribution of such Deferral Account, the number of deferred stock units credited to the UVV Stock Index Fund portion of the Deferral Account shall be increased on each date on which a dividend is paid on Universal Corporation common stock. The number of additional deferred stock units credited to the UVV Stock Index Fund portion of the Participant's Deferral Account as a result of such deemed dividend shall be determined by (i) multiplying the total number of deferred stock units (with fractional units rounded off to the nearest thousandth) credited to the UVV Stock Index Fund portion of such Deferral Account immediately before allocation of the dividend by the per share value of the dividend (determined as of the dividend payment date), and (ii) dividing the aggregate dividend value determined under (i) by the fair market value of Universal Corporation common stock on the dividend payment date. Further, notwithstanding any provisions hereof to the contrary, a Participant may only redirect his election of a deemed investment in the UVV Stock Index Fund (as to any amounts previously credited to such Participant's UVV Stock Index Fund under a Deferral Account) more than six months after (i) electing to transfer any portion of any Deferral Account to the UVV Stock Index Fund or (ii) transferring any amounts into any equity securities fund of Universal Corporation under any employee benefit plan of the Company or its affiliates. Moreover, such Participant may only make an initial deemed investment in the UVV Stock Index Fund, or redirect his election of deemed investment in another Investment Option into the UVV Stock Index Fund (as to any amounts previously credited to such Participant's other Investment Options) more than six months after (i) electing to transfer any portion of any Deferral Account out of the UVV Stock Index Fund (to other Investment Options) or (ii) transferring any amounts out of any equity securities fund of Universal Corporation under any employee benefit plan of the Company or its affiliates. 4. Plan Is Unfunded. Otherwise, while the allocation of investment selections for each Participant shall be made among the Investment Options, the Plan shall be and remain unfunded, and the Participants and the Plan shall have absolutely no ownership interest in any Investment Option. The Company, for its own account, may - but is not required to - invest the amounts represented by the Deferral Accounts in the Investment Options (other than the UVV Stock Index Fund, which shall remain uninvested). The Company shall be the sole owner of any funds invested in any such Investment Option, as well as all amounts accounted for in the Deferral Accounts, all of which shall at all times remain subject to the claims of the Company's general, unsecured creditors. E. Distributions 1. Pre-Deferral Irrevocable Payment Election. A Participant may irrevocably elect to receive the distribution of a Deferral Account, established with respect to a particular Plan Year's deferral, under one selected option from the following alternatives: (a) in a one-time partial distribution of a specified amount as of a specified future Valuation Date that is more than five (5) years from the date of execution of the related Deferral Agreement, with the remainder to be distributed, as elected, in accordance with either subsection (c), (d), (e) or (f) below, and with such partial distribution to be made on or before the fifteenth day of the month following the specified Valuation Date; (b) in a lump sum distribution of the entire related Deferral Account on a specified future Valuation Date that is more than five (5) years from the date of execution of the related Deferral Agreement, with payment made on or before the fifteenth day of the month following the specified Valuation Date; (c) upon termination of service as an Outside Director, in a lump sum distribution, with payment made on or before the fifteenth day of the month following the Valuation Date next following termination of service; (d) upon termination of service as an Outside Director, in annual installment payments for a specified period of up to fifteen (15) years, beginning or before the fifteenth day of the month following the Valuation Date next following termination of service and continuing (to be paid) on each subsequent anniversary date thereafter. Under this method, for example (assuming a fifteen year payment election), the first year's distribution amount will equal one-fifteenth (1/15) of the total accumulated Deferral Account under the election, the second year's distribution will equal one-fourteenth (1/14) of the remaining Deferral Account, and so forth; (e) upon an anniversary of the Participant's termination of service as an Outside Director selected by the Participant under the deferral election (for example, 2 years after termination of service), in annual installment payments thereafter for a specified period of up to fifteen (15) years, beginning on or before the fifteenth day of the month following the applicable anniversary date's Valuation Date and continuing to be paid as of each subsequent anniversary of the Valuation Date thereafter. Under this method, for example (assuming a fifteen year payment election), the first year's distribution amount will equal one-fifteenth (1/15) of the total accumulated Deferral Account, the second year's distribution will equal one-fourteenth (1/14) of the remaining Deferral Account, and so forth; or (f) upon the later of 1) termination of service as an Outside Director or 2) a specified future date that is more than five (5) years from the date of execution of the related Deferral Agreement, in annual installment payments for a specified period of up to fifteen (15) years, beginning on or before the fifteenth day of the month following the applicable specified or post-termination Valuation Date, and continuing (to be paid) on each subsequent anniversary date thereafter. Under this method, for example (assuming a fifteen year payment election), the first year's distribution amount will equal one-fifteenth (1/15) of the total accumulated Deferral Account, the second year's distribution will equal one-fourteenth (1/14) of the remaining Deferral Account, and so forth. Otherwise, if any Participant files an otherwise sufficient deferral election for any year that fails to properly select a distribution option, and such distribution selection is not corrected by the deferral election deadline for that year, then the Participant shall be deemed irrevocably to have selected option (c), distribution upon termination of service as an Outside Director in a lump sum distribution, with payment made on or before the fifteenth day of the month following the applicable post-termination Valuation Date. Further, notwithstanding the Participant's election of an irrevocable deferred lump sum or deferred installment payment from the options above, the distribution of any remaining Deferral Account to a Participant shall be accelerated in the event of his or her permanent disability (under Section 2 below), death (under Section 3 below) or a "Change of Control", as defined hereinafter (under Section 4 below); and, such distribution may be accelerated in the event of an "Unforeseeable Emergency", as defined hereinafter (under Section 5 below). 2. Payment in Event Participant Becomes Permanently Disabled. In the event a Participant terminates service as an Outside Director as a result of "total and permanent disability", in accordance with that term as otherwise defined in the Company long term disability benefits plan, the accelerated method of payment of such Participant's remaining Deferred Accounts under this Plan shall be a lump sum distribution, with payment made on or before the fifteenth day of the month following the Valuation Date coinciding with or next following the determination of the Participant's total disability. 3. Payment in Event of Participant's Death. In the event a Participant dies prior to the elected date for any payment (or remaining payment) of any Deferral Account, the accelerated method of payment of a Participant's then remaining Deferred Accounts shall be a lump sum distribution to the beneficiary(ies) previously designated in writing by the Participant, with payment made on or before the fifteenth day of the month following the Valuation Date coinciding with or next following the Participant's death. Each Participant shall designate in writing a beneficiary (or beneficiaries) to whom the death benefits hereunder are to be paid (should the Participant die prior to receiving complete distribution of his or her Deferral Accounts). A Participant may change his or her beneficiary designation at any time, by filing a revised and executed beneficiary designation form with the Committee (which shall only be effective upon receipt by the Committee). If a Participant fails to designate any beneficiary as provided for above, if no designated beneficiary survives the Participant or if each designated beneficiary dies before the distribution of all payments otherwise due hereunder with respect to any deceased Participant, the Company shall pay any remaining Deferral Accounts of the Participant to the Participant's estate. 4. Payment in Event of Change of Control. Upon the Occurrence of a "Change of Control", as defined below, with respect to either a Participant who continues to serves as an Outside Director or a Participant who has terminated service as an Outside Director (whether receiving payments currently hereunder or with deferred payments pending under prior elections), the Company shall pay such Participant his or her remaining Deferral Accounts in a lump sum distribution, with payment made on or before the fifteenth day of the month following the Valuation Date coinciding with or next following the date of the Change of Control. For the purpose of this Plan, a "Change of Control" shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"))(hereunder a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of Common Stock of Universal Corporation (the "Outstanding Common Stock") or (ii) the combined voting power of the then outstanding voting securities of Universal Corporation entitled to vote generally in the election of directors of Universal Corporation (the "Outstanding Voting Securities"); provided that, however, for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control hereunder: (i) any acquisition directly from Universal Corporation, (ii) any acquisition by Universal Corporation, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Universal Corporation or any corporation controlled by Universal Corporation or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) below; (b) Individuals who, as of October 1, 1994, constitute the Board of Directors of Universal Corporation (the "Incumbent Board") cease, for any reason, to constitute at least a majority of such Board; provided, however, that any individual becoming a director subsequent to October 1, 1994, whose election, or nomination for election, by the shareholders of Universal Corporation, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors of Universal Corporation; (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all, or substantially all, of the assets of Universal Corporation (a "Business Combination") in each case, unless, following such Business Combination: (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which, as a result of such transaction, owns Universal Corporation or all or substantially all of the assets of Universal Corporation, either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be; (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of Universal Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination and the combined voting power of the then outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) Approval by the shareholders of Universal Corporation of a complete liquidation or dissolution of Universal Corporation. 5. Payment in Event of Unforeseeable Emergency. (a) A distribution of a portion of a Participant's Deferral Account because of an Unforeseeable Emergency shall be permitted only to the extent required by the Participant to satisfy the Participant's emergency need. Whether an Unforeseeable Emergency hereunder has occurred will be determined solely by the Committee, which has the complete and exclusive discretion and authority to make such determination. Distributions in the event of an Unforeseeable Emergency may be made by and with the approval of the Committee, upon written request submitted by the Participant. b) An "Unforeseeable Emergency" hereunder is defined as a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant, loss of the Participant's property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant's control. The circumstances that will constitute an Unforeseeable Emergency will depend upon the facts of each situation, but, in any event, any distribution under this Section shall not exceed the remaining amount required by the Participant to resolve the hardship after: (i) reimbursement or compensation through insurance or otherwise; (ii) obtaining liquidation of the Participant's assets, to the extent such liquidation would not itself cause a severe financial hardship; and (iii) suspension of current deferrals under the Plan. F. Participants ' Rights 1. Participant Rights in the Unfunded Plan. Any liability of the Company to any Participant with respect to any benefit hereunder shall be based solely upon the contractual obligations created by the Plan and the related Deferral Agreements (collectively, the "Agreements"). No such obligation shall be deemed to be secured by any pledge or any encumbrance on any property of the Company. No Participant shall have any rights under the Plan other than those of a general unsecured creditor of the Company. Any assets segregated or otherwise identified by the Company for the purpose of paying benefits pursuant to the Plan nevertheless remain general corporate assets subject to the claims of the general creditors of the Company, and are not held in trust by the Company for the benefit of Plan Participants. 2. Benefits Not Assignable. Except as otherwise provided for under Section E.3., each Participant's rights under the Plan shall be non-transferable and non-assignable. Subject to the exceptions provided under this Plan, no benefit which shall be payable to any person (including a Participant or Beneficiary) shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge. Any such attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge such benefits shall be void. Further, no such benefit shall in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any such person, nor shall it be subject to attachment or legal process for or against such person, and the same shall not be recognized, except to such extent as may be required by law. G. The Company's Reservation of Rights 1. Amendment or Termination of Plan. The Company retains the right, at any time and in its sole and exclusive discretion, to amend or terminate the Plan, in whole or in part, without restriction. Any amendment of the Plan shall be approved by the Board of Directors of the Company or its authorized delegate, shall be in writing and shall be communicated within thirty (30) days of its adoption to the Participants. Notwithstanding the above, the Committee shall have and retain the authority to change the requirements of eligibility and to modify the Investment Options hereunder. Notwithstanding the above, no amendment of the Plan shall substantially impair or curtail the Company's contractual obligations under the Plan arising from Deferral Agreements previously executed as to deferrals completed and benefits accrued prior to such amendment. Further, notwithstanding any other provision herein to the contrary, in the event of Plan termination, full payment of all remaining Deferral Accounts shall be completed not later than the last business day of the third calendar month following the month in which the Plan termination is made effective. H. Claims Procedures and Committee Determinations 1. Claims Procedure. Any claim by a Participant or his or her Beneficiary (hereafter the "Claimant") for benefits shall be submitted in writing to the Committee. The Committee shall be responsible for deciding whether such claim is payable, or the claimed relief otherwise is allowable, under the provisions and rules of the Plan (a "Covered Claim"). The Committee otherwise shall be responsible for providing a full review of the Committee's decision with regard to any claim, upon a written request. Each claimant or other interested person shall file with the Committee such pertinent information as the Committee may specify, and in such manner and form as the Committee may specify; and, such person shall not have any rights or be entitled to any benefits, or further benefits, hereunder, as the case may be, unless the required information is filed by the Claimant or on behalf of the Claimant. Each Claimant shall supply, at such times and in such manner as may be required, written proof that the benefit is covered under the Plan. If it is determined that a Claimant has not incurred a Covered Claim or if the Claimant shall fail to furnish such proof as is requested, no benefits, or no further benefits, hereunder, as the case may be, shall be payable to such Claimant. Notice of any decision by the Committee with respect to a Claim generally shall be furnished to the Claimant within ninety (90) days following the receipt of the claim by the Committee (or within ninety (90) days following the expiration of the initial ninety (90) day period in any case where there are special circumstances requiring extension of time for processing the claim). If special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished by the Committee to the Claimant. Commencement of benefit payments shall constitute notice of approval of a claim to the extent of the amount of the approved benefit. If such claim shall be wholly or partially denied, such notice shall be in writing. If the Committee fails to notify the Claimant of the decision regarding his or her claim in accordance with the "Claims Procedure" provisions, the claim shall be "deemed" denied; and, the Claimant then shall be permitted to proceed with the claims review procedure provided for herein. Within sixty (60) days following receipt by the Claimant of notice of the claim denial, or within sixty (60) days following the date of a deemed denial, the Claimant may appeal denial of the claim by filing a written application for review with the Committee. Following such request for review, the Committee shall fully review the decision denying the claim. The decision of the Committee then shall be made within sixty (60) days following receipt by the Committee of a timely request for review (or within one hundred and twenty (120) days after such receipt, in a case where there are special circumstances requiring an extension of time for reviewing such denied claim). The Committee shall deliver its decision to the Claimant in writing. If the decision on review is not furnished within the prescribed time, the claim shall be deemed denied on review. 2. Committee Determinations Final. For all purposes under the Plan, the decision with respect to a claim (if no review is requested) and the decision with respect to a claims review (if requested), shall be final, binding and conclusive on all Participants, Beneficiaries and other interested parties, as to all matters relating to the Plan and Plan benefits. Further, each claims determination under the Plan shall be made in the absolute and exclusive discretion and authority of the Committee. I. Miscellaneous Provisions 1. Plan Year. The Plan Year shall begin on October 1 each year and end on September 30 of the following year. 2. Tax Withholding. The Company shall withhold from any payment made by it under the Plan such amount or amounts as may be required for purposes of complying with the tax withholding or other provisions of the Internal Revenue Code of 1986, as amended, the Social Security Act, as amended, or any federal, state or local income or employment tax provision; or otherwise, for purposes or paying any estate, inheritance or other tax attributable to any amounts payable hereunder. 3. Participant's Incapacity. If, in the Committee's opinion, a Participant or other person entitled to receive benefits under the Plan is in any way incapacitated so as to be unable to manage his or her financial affairs, then the Committee may make such payment(s) into a separate, interest-bearing account established for the benefit of, and on behalf of, the Participant or other recipient, for release at such time as a claim is made by a conservator or other person legally charged with the care of his or her person or of his or her estate, as applicable. Thereafter, any benefits payable under the Plan shall be made to such conservator or other person legally charged with the care of his or her person or estate. 4. Independence of Plan. Except as otherwise expressly provided herein, this Plan shall be independent of, and in addition to, any other agreement for the provision of services or rights that may exist, from time to time, between the parties hereto. 5. Responsibility for Legal Effect. Neither the Committee nor the Company makes any representations or warranties, express or implied, or assumes any responsibility, concerning the legal, tax or other implications or effects of this Plan. 6. Successors, Acquisitions, Mergers, Consolidations. The terms and conditions of the Plan and each Deferral Agreement thereunder shall inure to the benefit of, and bind, the Company and the Participants, and their successors, assigns and personal representatives. 7. Controlling Law. The Plan shall be construed in accordance with the laws of the Commonwealth of Virginia to the extent not preempted by laws of the United States of America. WITNESS the following signature this 9th day of November, 1998. /s/ William L. Taylor --------------------------- William L. Taylor, Vice President EX-10.33 3 1994 DEFERRED INCOME PLAN UNIVERSAL LEAF TOBACCO COMPANY, INCORPORATED 1994 DEFERRED INCOME PLAN Universal Leaf Tobacco Company, Incorporated (the "Sponsor") hereby amends and restates, effective as of July 1, 1998, except as otherwise provided for herein, the Universal Leaf Tobacco Company, Incorporated 1994 Deferred Income Plan, a non-qualified deferred compensation program for a select group of management employees, as otherwise provided for herein. The following shall constitute the terms and conditions of the amended and restated 1994 Deferred Income Plan, restated effective as of July 1, 1998, except as otherwise effective as provided for below. A. Purpose and Administration 1. Statement of Purpose The purpose of the 1994 Deferred Income Plan, as restated, (the "Plan") is to provide a select group of officers of Universal Leaf Tobacco Company, Incorporated ("ULT"), Universal Corporation ("Universal") and certain of Universal's domestic subsidiaries, as listed on Schedule A of the Plan as attached hereto and amended from time to time (the "Participating Subsidiaries") (such entities also sometimes referred to, individually or collectively, as the "Company"), with recurrent opportunities to defer receipt of a portion of salary and amounts to be earned pursuant to the applicable Management Performance Plan of the Company (together herein the "MPP"). Such deferrals hereunder (for a particular year), until a date certain in the future, will apply to amounts which otherwise would be payable currently (that is, in the year when such salary or MPP award would normally be determined, provided and paid). 2. Top Hat Plan The Sponsor intends that the Plan will constitute an unfunded "top hat" plan, maintained for the purpose of providing deferred compensation benefits to a select group of management employees of the Company, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Security Act of 1974 ("ERISA"), and the rules and regulations issued thereunder, as amended from time to time. 3. Plan Administration Full power and authority to construe, interpret and administer the Plan, and to change the requirements for eligibility and investment options, shall be vested solely and exclusively in the Executive Committee of the Sponsor (herein the "Committee"). The Committee shall have complete and exclusive discretion and authority to administer and interpret the Plan, to make determinations provided for, or permitted to be made, under the Plan and to establish such Plan rules and regulations, if any, that the Committee deems necessary or appropriate for the ongoing administration and operation of the Plan. B. Eligibility 1. Eligible Employees Participants in this Plan shall consist of the following corporate officers: (a) Officers of Universal; (b) Corporate Directors and above of ULT; (c) Vice Presidents and above of Participating Subsidiaries; and (d) Assistant Vice Presidents who are also Assistant General Managers at processing plants of Participating Subsidiaries. Upon participation, such officers are collectively referred to herein as the "Participants". C. Deferral Elections 1. Agreements The initial deferral agreement (the "Initial Agreement"), in a form approved by the Committee, shall be executed by the Company and each Participant to effectuate the deferrals described in Section 2(a) below. Subsequent deferral agreements (the "Subsequent Agreements"), in a form approved by the Committee, shall be executed by the Sponsor and each Participant to effectuate the deferrals described in Section 2(b) below (the Initial Agreement and the Subsequent Agreements are collectively referred to herein as the "Deferral Agreements"). Execution of the Deferral Agreements between the Company and each Participant shall constitute the sole and exclusive means for each Participant to effectuate deferral elections pursuant to the Plan. 2. Deferral Elections (a) Initial Deferral Each Participant, if otherwise eligible during such period, may elect (may have elected) in writing to defer an amount of salary up to a maximum of seventy-five percent (75%) of salary for the Plan's initial deferral period of July 1, 1994 through December 31, 1995 (the "Initial Deferral Period"). There are (were) two separate deferral elections for the Initial Deferral Period. The first election is (was) for the period July 1, 1994 to December 31, 1994, and the second election is (was) for Calendar Year 1995. Each Participant also may elect (may have elected) in writing to defer up to one hundred percent (100%) of his or her MPP award for the Sponsor's fiscal year beginning July 1, 1994 and ending June 30, 1995, which is (was) payable in September of 1995 (the "1995 MPP Award"), or all of his or her 1995 MPP award in excess of a fixed sum designated by the Participant, if any. The election with respect to salary for the Initial Deferral Period and/or the 1995 MPP Award shall be made (shall have been made) in the month of June, 1994. (b) Subsequent Deferrals Each Participant may elect in writing to defer an amount of salary up to a maximum of fifty percent (50%) of salary for the subsequent calendar year (the "Subsequent Deferral Period"). Each Participant also may elect in writing to defer either (i) up to one hundred percent (100%) of his or her MPP Award, if any, for the Sponsor's subsequent fiscal year, which is generally payable the September after the conclusion of the upcoming/new fiscal year (the "Subsequent MPP Award"), (ii) up to a fixed dollar amount of such Subsequent MPP Award, if any or (iii) such other amount of such Subsequent MPP Award determined under an MPP deferral option otherwise approved by the Committee in its sole discretion. Further, effective for deferral elections to be made in 1999 for calendar year 2000 compensation, and for subsequent elections under the Plan, the deferral election with respect to salary for the Subsequent Deferral Period and/or the Subsequent MPP Award generally shall be made by the Participant by the end of the month of September prior to the beginning of the subsequent calendar year in which any related salary and MPP Award will otherwise be determined and paid. For example, the election deferral deadline for 1999 (for the salary otherwise payable in Calendar Year 2000, and any MPP award otherwise finally determined and payable in September of 2000) shall be September 30, 1999. (c) New Participant Deferrals Any new Employee to the Company who is eligible to participate in the Plan subsequent to the Plan's commencement date of July 1, 1994 may elect to defer salary within thirty (30) days from the date on which he or she first becomes eligible to participate. Each continuing Employee who becomes eligible to participate in the Plan subsequent to the Plan's commencement date of July 1, 1994, may elect salary and/or MPP award deferrals during the next regular annual deferral election period. D. Deferral Accounts 1. Deferral Account The Company shall establish a deferral account in the name of each Participant on the Company's books and records, which shall reflect the amount of actual deferrals for a particular year plus any earnings and less any losses thereon (the "Adjustment") as described in Section 3 hereinafter, as an unfunded liability of the Company to the Participant (the actual deferral for such year, plus or minus the Adjustment, is collectively referred to herein as the "Deferral Account"). 2. Irrevocability of Deferral Elections Once a Participant elects to defer salary and/or an MPP award, pursuant to the terms of a Deferral Agreement, including elections as to amount, and timing and method of payment, such election shall be irrevocably binding upon the Participant. 3. Investment Options The Sponsor has selected the following initial investment funds, which may be modified from time to time by the Committee: The Oppenheimer Capital Appreciation Fund; The Oppenheimer Global Fund; The Massachusetts Mutual Equity Fund; The Massachusetts Mutual Bond Fund; The Massachusetts Mutual Money Market Fund; and The Dreyfus Stock Index Fund. The above funds, including any changes or additions thereto, shall be referred to individually or collectively as an "Investment Option" or the "Investment Options". The Sponsor shall use the Participant's Investment Option designations to calculate the Adjustment component of the Deferral Account. The Participant may each change his or her investment election designation each month, with regard to future contributions and current sub-accounts under the Deferral Account, either by calling 1-800-999-6808 or by submitting an investment allocation form. If a Participant changes his or her Investment Option designation for either amounts then in the Deferral Account or future contributions to be allocated to the Deferral Account, then such change shall supersede the previous designation for such sub-account, effective as of the first day of the month following the date of such changed election. The Sponsor shall begin crediting the Participant's Deferral Account with the amount deferred by the Participant on the last day of the month in which the salary or MPP Award, respectively, otherwise would have been paid to such Participant. Further, as to any applicable amount later distributed from the Plan, the Sponsor shall cease crediting or debiting Adjustments to the Participant's Deferral Account on the last day of the month of the applicable distribution event set forth in Section E (herein the "Valuation Date"). Plan Is Unfunded. Otherwise, while the allocation of investment selections for each Participant shall be made among the Investment Options, the Plan shall be and remain unfunded, and the Participants and the Plan shall have absolutely no ownership interest in any Investment Option. The Sponsor, for its own account, may, but is not required to, invest the amounts represented by the Deferral Accounts in the Investment Options. The Sponsor shall be the sole owner of any funds invested in any such Investment Option, as well as all amounts accounted for in the Deferral Accounts, all of which shall at all times be subject to the claims of the Company's general, unsecured creditors. E. Distributions 1. Pre-Deferral Irrevocable Payment Election A Participant may irrevocably elect to receive the distribution of a Deferral Account, established with respect to a particular year's deferral, under one selected option from the following alternatives (with options (e) and (f) available for the 1999 deferral election period and thereafter): (a) in a one-time partial distribution of a specified amount on a specified future date that is more than five (5) years from the date of execution of the related Deferral Agreement, with the remainder to be distributed, as elected, in accordance with either subsection (c), (d) or (e) below, and with such partial distribution to be made on or before the fifteenth day of the month following the specified Valuation Date; (b) in a lump sum distribution of the entire related Deferral Account on a specified future date that is more than five (5) years from the date of execution of the related Deferral Agreement, with payment made on or before the fifteenth day of the month following the specified Valuation Date; (c) upon retirement from the Company in a lump sum distribution, with payment made on or before the fifteenth day of the month following the applicable post-retirement Valuation Date; (d) upon retirement from the Company, in annual installment payments for a specified period of up to fifteen (15) years, beginning or before the fifteenth day of the month following the applicable post-retirement Valuation Date and continuing (to be paid) on each subsequent anniversary date thereafter. Under this method, for example (assuming a fifteen year payment election), the first year's distribution amount will equal one-fifteenth (1/15) of the total accumulated Deferral Account, the second year's distribution will equal one-fourteenth (1/14) of the remaining Deferral Account, and so forth; (e) upon an anniversary of the Participant's retirement from the Company selected by the Participant under the deferral election (for example, 2 years after the retirement date), in annual installment payments thereafter for a specified period of up to fifteen (15) years, beginning on or before the fifteenth day of the month following the applicable anniversary date's Valuation Date and continuing to be paid as of each subsequent anniversary of the Valuation Date thereafter. Under this method, for example (assuming a fifteen year payment election), the first year's distribution amount will equal one-fifteenth (1/15) of the total accumulated Deferral Account, the second year's distribution will equal one-fourteenth (1/14) of the remaining Deferral Account, and so forth; or (f) upon the later of 1) retirement from the Company or 2) a specified future date that is more than five (5) years from the date of execution of the related Deferral Agreement, in annual installment payments for a specified period of up to fifteen (15) years, beginning on or before the fifteenth day of the month following the applicable specified or post-retirement Valuation Date, and continuing (to be paid) on each subsequent anniversary date thereafter. Under this method, for example (assuming a fifteen year payment election), the first year's distribution amount will equal one-fifteenth (1/15) of the total accumulated Deferral Account, the second year's distribution will equal one-fourteenth (1/14) of the remaining Deferral Account, and so forth. Further, if a Participant files an otherwise sufficient deferral election for any year that fails to properly select a distribution option, and such distribution selection is not corrected by the deferral election deadline for that year, then the Participant shall be deemed irrevocably to have selected option (c), distribution upon retirement from the Company in a lump sum distribution, with payment made on or before the fifteenth day of the month following the applicable post-retirement Valuation Date. Otherwise, notwithstanding the Participant's election of an irrevocable deferred lump sum or deferred installment payment from the options above, however, the distribution of any remaining Deferral Account to a Participant shall be accelerated in the event of his or her permanent disability (under Section 2 below), death (under Section 3 below), termination of employment other than by retirement (under Section 4 below) or a "Change of Control", as defined hereinafter (under Section 5 below); and, such distribution may be accelerated in the event of an "Unforeseeable Emergency", as defined hereinafter (under Section 6 below). 2. Payment in Event Participant Becomes Permanently Disabled In the event a Participant terminates employment as a result of "total and permanent disability", as that term is defined in the Sponsor's Long Term Disability Benefits Plan, the accelerated method of payment of a Participant's remaining Deferred Accounts under this Plan shall be a lump sum distribution, with payment made on or before the fifteenth day of the month following the Valuation Date coinciding with or next following the Participant's determination of total disability. 3. Payment in Event of Participant's Death In the event a Participant dies prior to the elected date for any payment of any Deferral Account, the accelerated method of payment of a Participant's remaining Deferred Accounts shall be a lump sum distribution to the beneficiary previously designated in writing by the Participant, with payment made on or before the fifteenth day of the month following the Valuation Date coinciding with or next following the Participant's death. Each Participant shall designate in writing a beneficiary to whom the death benefits hereunder are to be paid (should the Participant die prior to receiving distribution of his or her entire Deferral Account). A Participant may change his or her beneficiary designation at any time, by filing a revised and executed beneficiary designation form with the Committee (which shall only be effective upon receipt by the Committee). If a Participant fails to designate any beneficiary as provided for above, if no designated beneficiary survives the Participant or if each designated beneficiary dies before the distribution of all payments otherwise due hereunder with respect to any deceased Participant, the Sponsor shall pay any remaining Deferral Accounts of the Participant to the Participant's estate. 4. Payment in Event of Participant's Termination of Employment Upon termination of employment for reasons other than retirement, total and permanent disability or death, the Company shall pay the terminated Participant his or her accumulated Deferral Accounts in a lump sum distribution, with payment made on or before the fifteenth day of the month following the Valuation Date coinciding with or next following the Participant's termination. 5. Payment in Event of Change of Control Upon the Occurrence of a "Change of Control", as defined below, with respect to either an employed Participant or a retired Participant who is either receiving payments hereunder or has deferred payments pending under prior elections, the Company shall pay such Participant his or her remaining Deferral Accounts in a lump sum distribution, with payment made on or before the fifteenth day of the month following the Valuation Date coinciding with or next following the date of the Change of Control. For the purpose of this Plan, a "Change of Control" shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"))(hereunder a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of Common Stock of Universal Corporation (the "Outstanding Common Stock") or (ii) the combined voting power of the then outstanding voting securities of Universal Corporation entitled to vote generally in the election of directors of Universal Corporation (the "Outstanding Voting Securities"); provided that, however, for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control hereunder: (i) any acquisition directly from Universal Corporation, (ii) any acquisition by Universal Corporation, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Universal Corporation or any corporation controlled by Universal Corporation or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) below; (b) Individuals who, as of July 1, 1994, constitute the Board of Directors of Universal Corporation (the "Incumbent Board") cease, for any reason, to constitute at least a majority of such Board; provided, however, that any individual becoming a director subsequent to July 1, 1994, whose election, or nomination for election, by the shareholders of Universal Corporation, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors of Universal Corporation; (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all, or substantially all, of the assets of Universal Corporation (a "Business Combination") in each case, unless, following such Business Combination: (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which, as a result of such transaction, owns Universal Corporation or all or substantially all of the assets of Universal Corporation, either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be; (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of Universal Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination and the combined voting power of the then outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) Approval by the shareholders of Universal Corporation of a complete liquidation or dissolution of Universal Corporation. 6. Payment in Event of Unforeseeable Emergency (a) A distribution of a portion of a Participant's Deferral Account because of an Unforeseeable Emergency shall be permitted only to the extent required by the Participant to satisfy the Participant's emergency need. Whether an Unforeseeable Emergency hereunder has occurred will be determined solely by the Committee, which has the complete and exclusive discretion and authority to make such determination. Distributions in the event of an Unforeseeable Emergency may be made by and with the approval of the Committee, upon written request submitted by the Participant. b) An "Unforeseeable Emergency" hereunder is defined as a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant, loss of the Participant's property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant's control. The circumstances that will constitute an Unforeseeable Emergency will depend upon the facts of each situation, but, in any event, any distribution under this Section shall not exceed the remaining amount required by the Participant to resolve the hardship after: (i) reimbursement or compensation through insurance or otherwise; (ii) obtaining liquidation of the Participant's assets, to the extent such liquidation would not itself cause a severe financial hardship; and (iii) suspension of current deferrals under the Plan under this Section. F. Participants' Rights 1. Participant Rights in the Unfunded Plan Any liability of the Company to any Participant with respect to any benefit hereunder shall be based solely upon the contractual obligations created by the Plan and the related Deferral Agreements (collectively, the "Agreements"). No such obligation shall be deemed to be secured by any pledge or any encumbrance on any property of the Company. No Participant shall have any rights under the Plan other than those of a general unsecured creditor of the Company. Any assets segregated or otherwise identified by the Company for the purpose of paying benefits pursuant to the Plan nevertheless remain general corporate assets subject to the claims of the general creditors of the Company, and are not held in trust by the Company for the benefit of Plan Participants. 2. Benefits Not Assignable Except as otherwise provided for under Section E.3., each Participant's rights under the Plan shall be non-transferable and non-assignable. Subject to the exceptions provided under the Plan, no benefit which shall be payable to any person (including a Participant or Beneficiary) shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge. Any such attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge such benefits shall be void. Further, no such benefit shall in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any such person, nor shall it be subject to attachment or legal process for or against such person, and the same shall not be recognized, except to such extent as may be required by law. G. The Sponsor's Reservation of Rights 1. Amendment or Termination of Plan The Sponsor retains the right, at any time and in its sole and exclusive discretion, to amend or terminate the Plan, in whole or in part, without restriction. Any amendment of the Plan shall be approved by the Board of Directors of the Sponsor, shall be in writing and shall be communicated within thirty (30) days of its adoption to the Participants. Notwithstanding the above, the Committee shall have the authority to change the requirements of eligibility or to modify the Investment Options hereunder. Notwithstanding the above, no amendment of the Plan shall substantially impair or curtail the Sponsor's contractual obligations under the Plan arising from Deferral Agreements previously executed as to deferrals completed and benefits accrued prior to such amendment. Further, notwithstanding any other provision herein to the contrary, in the event of Plan termination, full payment of all remaining Deferral Accounts shall be completed not later than the last business day of the third calendar month following the month in which the Plan termination is made effective. H. Claims for Benefits 1. Claims Procedure Any claim by a Participant or his or her Beneficiary (hereafter "Claimant") for benefits shall be submitted in writing to the Committee. The Committee shall be responsible for deciding whether such claim is payable, or the claimed relief otherwise is allowable, under the provisions and rules of the Plan (a "Covered Claim"). The Committee otherwise shall be responsible for providing a full and fair review of the Committee's decision with regard to any claim, if requested. The Committee shall provide such full and fair review in accordance with the requirements of ERISA, including without limitation the requirements of Section 503 thereof. Each claimant or other interested person shall file with the Committee such pertinent information as the Committee may specify, and in such manner and form as the Committee may specify and provide, and such person shall not have any rights or be entitled to any benefits, or further benefits, hereunder, as the case may be, unless the required information is filed by the Claimant or on behalf of the Claimant. Each Claimant shall supply, at such times and in such manner as may be required, written proof that the benefit is covered under the Plan. If it is determined that a Claimant has not incurred a Covered Claim or if the Claimant shall fail to furnish such proof as is requested, no benefits, or no further benefits, hereunder, as the case may be, shall be payable to such Claimant. Notice of any decision by the Committee with respect to a Claim shall be furnished to the Claimant within ninety (90) days following the receipt of the claim by the Committee (or within ninety (90) days following the expiration of the initial ninety (90) day period, in any case where there are special circumstances requiring extension of time for processing the claim). If special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished by the Committee to the Claimant prior to the expiration of the initial ninety (90) day period. The notice of extension shall indicate the special circumstances requiring the extension and the date by which the notice of decisions with respect to the claim shall be furnished. Commencement of benefit payments shall constitute notice of approval of a claim to the extent of the amount of the approved benefit. If such claim shall be wholly or partially denied, such notice shall be in writing and worded in a manner calculated to be understood by the Claimant, and shall set forth (i) the specific reason or reasons for the denial; (ii) specific reference to pertinent provisions of the Plan on which the denial is based; (iii) a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) an explanation of the Plan's claims review procedure. If the Committee fails to notify the Claimant of the decision regarding his or her claim in accordance with the "Claims Procedure" provisions, the claim shall be "deemed" denied and the Claimant then shall be permitted to proceed with the claims review procedure provided herein. Within sixty (60) days following receipt by the Claimant of notice of the claim denial, or within sixty (60) days following the close of the ninety (90) day period referred to herein if the Committee fails to notify the Claimant of a decision within such ninety (90) day period, the Claimant may appeal denial of the claim by filing a written application for review with the Committee. Following such request for review, the Committee shall fully and fairly review the decision denying the claim. Prior to the decision of the Committee, the Claimant shall be given an opportunity to review pertinent documents and submit any issues and comments to the Committee in writing. The decision of the Committee then shall be made within sixty (60) days following receipt by the Committee of a timely request for review (or within one hundred and twenty (120) days after such receipt, in a case where there are special circumstances requiring an extension of time for reviewing such denied claim). The Committee shall deliver its decision to the Claimant in writing. If the decision on review is not furnished within the prescribed time, the claim shall be deemed denied on review. For all purposes under the Plan, the decisions with respect to a claim, if no review is requested, and the decisions with respect to a claim review, when requested, shall be final, binding and conclusive on all Participants, Beneficiaries and other interested parties, as to all matters relating to the Plan and Plan benefit. Further, each claims determination under the Plan shall be made in the absolute and exclusive discretion and authority of the Committee. I. Miscellaneous Provisions 1. Effect on Other Benefits Except as otherwise required by applicable law, the salary deferred by a Participant shall otherwise be included in the Participant's annual compensation for purposes of calculating the Participant's bonuses and awards, insurance and other employee benefits. However, in accordance with the terms of any plan qualified under Section 401 of the Internal Revenue Code maintained by the Sponsor, the amount of salary deferrals under the Plan shall not be included as calendar year compensation in calculating the Participant's benefits or contributions by or on behalf of the Participant. Distributions made under the Plan shall be excluded from compensation in years paid for purposes of calculating a Participant's bonuses and awards, insurance and other employee benefits. 2. Plan Year The Plan Year shall be the calendar year. 3. Tax Withholding The Sponsor shall withhold from any payment made by it under the Plan such amount or amounts as may be required for purposes of complying with the tax withholding or other provisions of the Internal Revenue Code of 1986, as amended, the Social Security Act, as amended, or any federal, state or local income or employment tax provision; or otherwise, for purposes or paying any estate, inheritance or other tax attributable to any amounts payable hereunder. 4. Participant's Incapacity If, in the Committee's opinion, a Participant or other person entitled to receive benefits under the Plan is in any way incapacitated so as to be unable to manage his or her financial affairs, then the Committee may make such payment(s) into a separate, interest-bearing account established for the benefit of, and on behalf of, the Participant or other recipient, for release at such time as a claim is made by a conservator or other person legally charged with the care of his or her person or of his or her estate, as applicable. Thereafter, any benefits payable under the Plan shall be made to such conservator or other person legally charged with the care of his or her person or estate. 5. Independence of Plan Except as otherwise expressly provided herein, this Plan shall be independent of, and in addition to, any other employment agreement or employment benefit agreement, plan or rights that may exist from time to time between the parties hereto. This Plan shall not be deemed, however, to constitute a contract of employment between the Company and a Participant; nor shall any provision hereof restrict the right of the Company at any time to discharge a Participant, with or without assigning a reason therefore, or restrict any right of a Participant to terminate his or her employment with the Company. 6. Responsibility for Legal Effect Neither the Committee nor the Company makes any representations or warranties, express or implied, or assumes any responsibility concerning the legal, tax, or other implications or effects of this Plan. 7. Successors, Acquisitions, Mergers, Consolidations The terms and conditions of the Plan and each Deferral Agreement thereunder shall inure to the benefit of, and bind, the Company and the Participants, and their successors, assigns and personal representatives. 8. Controlling Law The Plan shall be construed in accordance with the laws of the Commonwealth of Virginia, to the extent not preempted by the laws of the United States of America. WITNESS the following signature this 9th day of November, 1998. /s/ William L. Taylor --------------------------- William L. Taylor, Executive Vice President SCHEDULE A DESIGNATED AFFILIATED COMPANIES UNIVERSAL LEAF NORTH AMERICA NC, INC. LANCASTER LEAF TOBACCO COMPANY OF PENNSYLVANIA, INC. IMPERIAL PROCESSING DIVISION OF LANCASTER LEAF TOBACCO COMPANY OF PENNSYLVANIA, INC. SOUTHERN PROCESSORS, INCORPORATED J. P. TAYLOR COMPANY, INCORPORATED J. P. TAYLOR TOBACCO COMPANY, INCORPORATED TOBACCO PROCESSORS, INCORPORATED RED RIVER FOODS, INCORPORATED SOUTHWESTERN TOBACCO COMPANY, INCORPORATED GOLD HARBOR COMMODITIES, INC. EX-11 4 RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12. Universal Corporation and Subsidiaries RATIO OF EARNINGS TO FIXED CHARGES Three Months Ended September 30, 1998 and 1997 September 30, September 30, (In thousands of dollars) 1998 1997 - ------------------------------------------------------------------------------- Income before income taxes and other items $43,298 $53,741 Fixed charges 15,970 14,001 ------------------ ----------------- Earnings $59,268 $67,742 ================== ================= Interest $15,542 $13,802 Interest of unconsolidated affiliates 98 110 Note discount amortization 330 89 ------------------ ----------------- Fixed Charges $15,970 $14,001 ================== ================= Ratio of Earnings to Fixed Charges 3.7 4.8 ==== === EX-27 5 FINANCIAL DATA SCHEDULE
5 0000102037 UNIVERSAL CORPORATION 1,000 3-MOS JUN-30-1999 SEP-30-1998 87,621 0 479,016 0 800,617 1,407,805 736,676 395,089 2,050,059 1,129,129 246,675 26,250 0 0 505,446 2,050,059 879,285 879,285 742,701 742,701 0 0 15,542 43,298 16,021 27,057 0 0 0 27,057 .79 .78
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