EXHIBIT 10.34
 
 
UNIVERSAL CORPORATION
 
2001 NON-QUALIFIED STOCK OPTION AGREEMENT
 
THIS AGREEMENT dated as of December 6, 2001, 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 1997 Executive Stock Plan 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 6, 2001,
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 $36.40 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 6, 2011.

 

 
(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

 

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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. Notwithstanding
anything stated in this subparagraph 2(b) to the contrary, this option shall
become exercisable, with respect to the total number of shares of Common Stock
covered by this option, as set forth in paragraph 1 above, 12 months after the
date hereof, so long as (i) the Optionee is employed by the Company or an
Affiliate on the date of exercise of this option and (ii) all such shares
covered by this option (or the “net” thereof provided the remainder is used to
pay withholding taxes, costs and expenses associated with such exercise) are
immediately transferred upon exercise to the “Optionee’s Account” (as that term
is defined in a “Stock Option and Equity Accumulation Agreement” between the
Optionee and the Company that the Committee may authorize) pursuant to the terms
and conditions of the Company’s Career Equity Ownership Program.

 

 
(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

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delivery or attestation) of mature shares of Common Stock (shares held by the
Optionee for at least six months) 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 instructions to
sell a sufficient number of shares of Common Stock to cover the costs and
expenses associated therewith.

 

 
(e)
 
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.

 

 
(f)
 
Designation of Beneficiary. The Optionee may designate a beneficiary by
completing a beneficiary designation form approved by the Committee and
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

 

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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.

 

 
(g)
 
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 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.

 
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 employment shall be

 

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violation of paragraph 6 hereof. For purposes of the preceding sentence, the
Optionee’s employment shall be deemed to have been terminated for cause if the
Optionee’s employment is terminated as 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 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 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 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

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Company and its Affiliates. During the course of his employment by the Company,
the Optionee will have substantial contact with these customers and prospective
customers. In order to protect the goodwill of the Company’s and the Affiliate’s
businesses, the Optionee covenants and agrees that, in the event of the
termination of his 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,

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nor shall it interfere in any way with the right of the Company or an Affiliate
to terminate his employment at any time.
 
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.
 
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly
authorized officer, and the Optionee has affixed his signature hereto.

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UNIVERSAL CORPORATION
 
OPTIONEE
By:                                     
                                        
                                        
                                                 
Title:                                                               
 
[Name]

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UNIVERSAL CORPORATION
 
Schedule of Grants to Executive Officers
 
Optionees

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Options Granted

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George C. Freeman, III
 
10,000
James A. Huffman
 
10,000

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