SCHEDULE 14A
                                 (Rule 14a-101)
                     Information Required in Proxy Statement

                            SCHEDULE 14A INFORMATION
                Proxy Statement Pursuant to Section 14(a) of the
                         Securities Exchange Act of 1934
                                (Amendment No. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<CAPTION>
<S>                                                     <C>
[X]  Preliminary Proxy Statement                        [ ]  Confidential, For Use of the Commission 
                                                             Only (as permitted by Rule 14a-6(e)(2))
[ ]  Definitive Proxy Statement
[ ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to Rule 14a-
     11(c) or Rule 14a-12
</TABLE>


                              UNIVERSAL CORPORATION
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]    No fee required.

[ ]    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

       (1)    Title of each class of securities to which transaction applies:
              ..................................................................
       (2)    Aggregate number of securities to which transaction applies:
              ..................................................................
       (3)    Per unit price or other underlying  value of transaction  computed
              pursuant to Exchange  Act Rule 0-11 (set forth the amount on which
              the filing fee is calculated and state how it was determined):
              ..................................................................
       (4)    Proposed maximum aggregate value of transaction:
              ..................................................................
       (5)    Total fee paid:
              ..................................................................


<PAGE>

[ ]    Fee paid previously with preliminary materials.
       .........................................................................

[ ]    Check box if any part of the fee is offset as provided  by  Exchange  Act
       Rule  0-11(a)(2) and identify the filing for which the offsetting fee was
       paid previously.  Identify the previous filing by registration  statement
       number, or the form or schedule and the date of its filing.

       (1)    Amount previously paid:
              ..................................................................
       (2)    Form, Schedule or Registration Statement no.:
              ..................................................................
       (3)    Filing Party:
              ..................................................................
       (4)    Date Filed:
              ..................................................................


<PAGE>

                                                              PRELIMINARY 9/9/98



                              Universal Corporation

                                 --------------

                         ANNUAL MEETING OF SHAREHOLDERS
                                 --------------


                                                              September 24, 1998


Dear Shareholder:

         You are  cordially  invited  to  attend  the  1998  Annual  Meeting  of
Shareholders  of  Universal  Corporation,  which is to be held in the  Company's
Headquarters Building located at Hamilton Street at Broad,  Richmond,  Virginia,
on Tuesday,  October 27, 1998,  commencing at 2:00 p.m. At the meeting, you will
be asked to elect three Directors to serve a three-year term and one Director to
serve a two-year  term,  and to approve a proposed  amendment  to the  Company's
Articles of Incorporation. The amendment would increase the number of authorized
shares of Common  Stock from 50 million to 100  million in order to provide  for
future needs of your Company.

         Your Board of Directors  recommends you VOTE FOR the proposed amendment
to the Articles of  Incorporation  for the reasons set forth in the accompanying
Proxy Statement. The affirmative vote of a majority of the outstanding shares of
Common Stock must approve this action.

         The right to vote your  shares at the Annual  Meeting  is an  important
shareholder  right  and  should  be  exercised  by you  in  person  or by  proxy
regardless  of the number of shares you hold.  Whether or not you plan to attend
the meeting,  please  complete,  sign,  date and mail your proxy promptly in the
enclosed postage-paid envelope.

                                            Sincerely,




                                            Henry H. Harrell
                                            Chairman and Chief
                                            Executive Officer



<PAGE>

                              Universal Corporation
                                 P.O. Box 25099
                            Richmond, Virginia 23260


                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS


         The Annual  Meeting  of  Shareholders  of  Universal  Corporation  (the
"Company")  will be held  in the  Company's  Headquarters  Building  located  at
Hamilton Street at Broad, Richmond,  Virginia, on Tuesday,  October 27, 1998, at
2:00 p.m., for the following purposes:

         (1)     To elect three  Directors  to serve a  three-year  term and one
                 Director to serve a two-year term;

         (2)     To amend the Company's  Articles of  Incorporation  to increase
                 the authorized number of shares of Common Stock from 50 million
                 to 100 million; and

         (3)     To act upon such other  matters as may properly come before the
                 meeting or any adjournments thereof.

         Only holders of record of shares of the  Company's  Common Stock at the
close of  business  on  September  8,  1998,  shall be  entitled  to vote at the
meeting.

         Please sign and promptly mail the enclosed proxy to insure the presence
of a quorum at the meeting.


                                             By Order of the Board of Directors,

                                                             James M. White, III

                                                                       Secretary


September 24, 1998



<PAGE>

                                 PROXY STATEMENT

         The  enclosed  proxy is  solicited  by the  Board of  Directors  of the
Company.  A  shareholder  may revoke the proxy at any time prior to its use, but
proxies  properly  executed  and received by the  Secretary  prior to the Annual
Meeting, and not revoked, will be voted.

         The  Company  will  pay all of the  costs  associated  with  the  proxy
solicitation.  Proxies are being  solicited by mail and may also be solicited in
person or by telephone,  telegraph,  telefacsimile  or other means of electronic
transmission  by Directors,  officers and employees of the Company.  The Company
will reimburse  banks,  brokerage  firms, and other  custodians,  nominees,  and
fiduciaries for their  reasonable  expenses in forwarding proxy materials to the
beneficial   owners  of  the  shares  of  the  Company's  Common  Stock.  It  is
contemplated that additional  solicitation of proxies will be made by D. F. King
& Co., Inc., 77 Water Street,  New York, New York 10005, at an anticipated  cost
to the Company of $4,000, plus reimbursement of out-of-pocket expenses.

         This  Proxy  Statement  will be mailed  to  registered  holders  of the
Company's Common Stock on or about September 24, 1998.

                                  VOTING RIGHTS

         The Company had outstanding, as of September 8, 1998, 34,506,306 shares
of Common Stock,  each of which is entitled to one vote per share. A majority of
the shares entitled to vote,  represented in person or by proxy, will constitute
a  quorum  for  the  transaction  of  business  at  the  Annual  Meeting.   Only
shareholders  of record at the close of business on September  8, 1998,  will be
entitled to vote.

         The  Company is not aware of any  matters  that are to come  before the
meeting other than those described in this Proxy  Statement.  However,  if other
matters do properly come before the meeting,  it is the intention of the persons
named in the  enclosed  proxy card to vote such proxy in  accordance  with their
best judgment.

                                  Proposal One

                              ELECTION OF DIRECTORS

         Three Directors are to be elected at the 1998 Annual Meeting for a term
of three years and one  Director  is to be elected for a term of two years.  Six
other  Directors  have  been  elected  to terms  expiring  in 2000 or  1999,  as
indicated  below.  The following  pages set forth certain  information  for each
nominee and each incumbent Director as of June 30, 1998. All of the nominees and
incumbent  Directors  listed  below were  previously  elected  Directors  by the
shareholders except Jeremiah J. Sheehan,  who was elected by the Board effective
January 1, 1998. John D. Munford,  II, a Director from 1988 to 1998, has reached
retirement age and will not stand for reelection.

         The election of each nominee for Director requires the affirmative vote
of the holders of a plurality of the shares of Common Stock cast in the election
of  Directors.  Votes that are withheld and shares held in street name  ("Broker
Shares") that are not voted in the election of Directors will not be included in
determining  the  number  of  votes  cast.  Unless  otherwise  specified  in the
accompanying  form of proxy,  it is  intended  that  votes  will be cast for the
election  of all of the  nominees  as  Directors.  If, at the time of the Annual
Meeting,  any  nominee  should  be  unavailable  to serve as a  Director,  it is
intended  that votes will be cast,  pursuant  to the  enclosed



<PAGE>

proxy,  for  such  substitute  nominee  as may be  nominated  by  the  Board  of
Directors,  or the Board of Directors may reduce the number of  Directors.  Each
nominee  has  consented  to being named in the Proxy  Statement  and to serve if
elected.

                Nominees for Election Whose Terms Expire in 2001

         CHARLES H. FOSTER,  JR., 55, is Chairman and Chief Executive Officer of
LandAmerica  Financial Group, Inc. (formerly Lawyers Title  Corporation)  (title
insurance holding company) and of Lawyers Title Insurance Corporation, positions
he has held for more than five years. He is a Director of LandAmerica  Financial
Group,  Inc.  Mr.  Foster is a member of the Finance  Committee  and the Pension
Investment Committee. He has been a Director since 1995.

         ALLEN B. KING,  52, is  President  and Chief  Operating  Officer of the
Company and of Universal Leaf Tobacco Company,  Incorporated ("Universal Leaf"),
a subsidiary of the Company,  positions he has held for more than five years. He
is Chairman of the Finance  Committee and a member of the  Executive  Committee.
Mr. King has been a Director since 1989.

         JEREMIAH J. SHEEHAN,  59, is Chairman of the Board and Chief  Executive
Officer of Reynolds Metals Company  (aluminum and other products).  From 1994 to
October 1996, he was President  and Chief  Operating  Officer,  and from 1993 to
1994, he was Executive Vice  President,  Fabricated  Products of Reynolds Metals
Company.  Mr.  Sheehan is a Director of Reynolds  Metals  Company and Union Camp
Corporation. He is a member of the Audit Committee and has been a Director since
January 1, 1998.

                 Nominee for Election Whose Term Expires in 2000

         JOSEPH  C.  FARRELL,  62,  retired  as  Chairman,  President  and Chief
Executive   Officer  of  The  Pittston  Company  (coal,   mineral  products  and
transportation  and  security  services)  on March 1, 1998.  He is a Director of
Aeroquip-Vickers,  Inc. Mr.  Farrell is a member of the Audit  Committee and has
been a Director since 1996.

         The Board of Directors  recommends that the  shareholders  vote for the
nominees set forth above.

                 Incumbent Directors Whose Terms Expire in 2000

         HENRY H. HARRELL,  59, is Chairman and Chief  Executive  Officer of the
Company and of Universal  Leaf,  positions he has held for more than five years.
He is Chairman of the Executive Committee and a member of the Finance Committee.
Mr. Harrell has been a Director since 1984.

         HUBERT R.  STALLARD,  61, is President and Chief  Executive  Officer of
Bell Atlantic-Virginia,  Inc.  (telecommunications),  a position he has held for
more than five  years.  He is a Director  of Trigon  Healthcare,  Inc.  and Bell
Atlantic-Virginia,  Inc. Mr. Stallard is a member of the Audit Committee and the
Pension Investment Committee and has been a Director since 1991.

                                      -2-

<PAGE>

                 Incumbent Directors Whose Terms Expire in 1999

         WILLIAM W. BERRY,  66, retired as Chairman of the Board of Directors of
Dominion Resources,  Inc. (public utility holding company) on December 30, 1992.
He is a Director of Scott & Stringfellow  Financial Corp. and Ethyl Corporation.
Mr. Berry is Chairman of the  Executive  Compensation  Committee and a member of
the Executive  Committee  and the Pension  Investment  Committee.  He has been a
Director since 1986.

         RONALD E.  CARRIER,  66, is President of James  Madison  University,  a
position  he has held for more  than five  years.  He is  Chairman  of the Audit
Committee and a member of the Executive Compensation Committee.  Dr. Carrier has
been a Director since 1979.

         LAWRENCE S.  EAGLEBURGER,  68, is Senior  Foreign Policy Advisor to the
law firm of Baker, Donelson, Bearman & Caldwell, a position he has held for more
than five years.  He served as United  States  Secretary of State from  December
1992  through  January  1993,  Acting  Secretary  of State from  August  1992 to
December 1992, and Deputy  Secretary of State from February 1989 to August 1992.
Mr.  Eagleburger  is a Director  of COMSAT  Corporation,  Corning  Incorporated,
Dresser   Industries,   Inc.,   Phillips   Petroleum   Company  and  Stimpsonite
Corporation. He is a member of the Audit Committee and has been a Director since
1993.

         RICHARD  G.  HOLDER,  67,  retired as  Chairman  of the Board and Chief
Executive  Officer of  Reynolds  Metals  Company  on  October  1, 1996.  He is a
Director of Corn Products  International,  Inc. and  Bestfoods.  Mr. Holder is a
member of the Executive Committee and the Executive  Compensation  Committee and
has been a Director since 1992.

                                 STOCK OWNERSHIP

         The following table sets forth certain  information with respect to the
beneficial  ownership  of the  Company's  Common  Stock by (i) each  Director or
nominee,  (ii) each executive officer listed in the Summary  Compensation  Table
and (iii) all Directors and  executive  officers as a group.  No person known to
the Company  beneficially owns more than 5% of the outstanding  shares of Common
Stock.

<TABLE>
<CAPTION>
Name of Beneficial Owner                    Number of Shares 1,2,3     Percent of Class
- ---------------------------------------------------------------------------------------
<S>                                              <C>                           <C>
William W. Berry                                   7,546                       *
Ronald E. Carrier                                  7,400                       *
Lawrence S. Eagleburger                            6,200                       *
Joseph C. Farrell                                  4,400                       *
Charles H. Foster, Jr.                             5,500                       *
Henry H. Harrell                                  93,988                       *
Richard G. Holder                                  7,100                       *
Allen B. King                                     58,998                       *
John D. Munford, II                                7,568                       *
Hartwell H. Roper                                 41,597                       *
Jeremiah J. Sheehan                                1,000                       *
Hubert R. Stallard                                 7,348                       *
William L. Taylor                                 25,614                       *
Jack M.M. van de Winkel                           17,500                       *
All Directors and executive officers             331,394                       *
   as a group (16 persons)
</TABLE>



                                      -3-

<PAGE>

- -----------------

         * Percentage of ownership is less than 1% of the outstanding  shares of
Common Stock of the Company.

         1 Except as  otherwise  noted,  the number of shares of Common Stock of
the Company shown in the table is as of June 30, 1998.

         2 The  number of shares of  Common  Stock of the  Company  shown in the
table does not include  shares that certain  officers of the Company may acquire
upon  the  exercise  of  stock   options   that,   except  under   extraordinary
circumstances,  are  automatically  exercisable  at  not  less  than  six  month
intervals when at least a minimum stock price appreciation has occurred.

         3 The  number of shares of  Common  Stock of the  Company  shown in the
table includes 94,354 shares held for certain  Directors and executive  officers
in the  Employees'  Stock Purchase Plan of Universal Leaf and 67,100 shares that
certain  Directors  and  executive  officers  of the  Company  have the right to
acquire  through the exercise of stock options within 60 days following June 30,
1998.  The number of shares above also includes 1,250 shares that are jointly or
solely  held by minor  children  or  other  children  living  at home or held in
fiduciary capacities.  Such shares may be deemed to be beneficially owned by the
rules of the Securities  and Exchange  Commission but inclusion of the shares in
the table does not constitute admission of beneficial ownership.

         The  Employees'  Stock  Purchase Plan of Universal  Leaf held 1,238,753
shares or 3.6% of the shares of Common Stock  outstanding on June 30, 1998. Each
participant in the Plan has the right to instruct  Wachovia Bank, N.A.,  trustee
for the Plan,  with  respect  to the  voting of shares  allocated  to his or her
account.  The  trustee,  however,  will vote any shares for which it receives no
instructions  in the same  proportion  as those shares for which it has received
instructions.

             Section 16(a) Beneficial Ownership Reporting Compliance

         The  Company's  Directors  and  executive  officers are required  under
Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,  to file
reports of  ownership  and changes in  ownership  of Common Stock of the Company
with the  Securities and Exchange  Commission  and the New York Stock  Exchange.
Copies of those reports must also be furnished to the Company.

         Based  solely on a review of the  copies of  reports  furnished  to the
Company and the written representations of its Directors and executive officers,
the  Company   believes  that  during  the  preceding  fiscal  year  all  filing
requirements applicable to Directors and executive officers were satisfied.

                                   COMMITTEES

         The standing  committees  of the Board of Directors  are the  Executive
Committee,  the Finance Committee,  the Audit Committee,  the Pension Investment
Committee  and the  Executive  Compensation  Committee.  There is no  nominating
committee.  The Executive  Committee,  which is subject to the  supervision  and
control of the Board of Directors,  has been delegated  substantially all of the
powers of the Board of  Directors  in order for the  Executive  Committee to act
between  meetings of the Board. The Finance  Committee,  which is subject to the
supervision  and control of the Board of Directors,  has the  responsibility  of
establishing  the financial  policies of the Company and its  subsidiaries.  The
responsibilities  of the Audit Committee include the


                                      -4-

<PAGE>

review  of the  scope  and the  results  of the work of the  independent  public
accountants  and  internal  auditors,  the review of the  adequacy  of  internal
accounting  controls and the  recommendation to the Board of Directors as to the
selection of independent public  accountants.  The Pension Investment  Committee
establishes the pension investment  policies,  selects  investment  advisors and
monitors  the  performance  of pension  investments  of the Company and its U.S.
subsidiaries.  After receiving recommendations from the Chief Executive Officer,
the Executive  Compensation  Committee  fixes the  compensation  of officers and
makes awards under the Company's incentive compensation plans.

         During the fiscal year ended June 30, 1998, there were five meetings of
the  Board of  Directors,  seven  meetings  of the  Executive  Committee,  three
meetings of the Finance Committee,  three meetings of the Audit Committee, three
meetings of the Pension Investment Committee and three meetings of the Executive
Compensation  Committee.  All Directors attended 75% or more of the total number
of meetings of the Board of Directors  and all  committees of the Board on which
they served, except Mr. Eagleburger.

                             DIRECTORS' COMPENSATION

         Each  Director who is not an officer of the Company  receives an annual
retainer of $18,000,  a fee of $1,000 for each Board meeting  attended and a fee
of $1,000 for each committee meeting attended.

         The Outside Directors' 1994 Deferred Income Plan (the "Directors' DIP")
permits a non-employee  Director to defer all or a portion of his  compensation.
Deferred  amounts  are  deemed  hypothetically  invested  as  designated  by the
Director in any  investment  options  selected  by the  Company for  purposes of
calculating a market return for accounting purposes. In 1998, the Directors' DIP
was amended to add a Deferred  Stock Unit Fund comprised of Deferred Stock Units
to the investment  options.  Each Deferred Stock Unit  represents a hypothetical
share of the  Company's  Common  Stock and  fluctuates  in value with the market
price of the  stock.  The  portion of a  Director's  Deferral  Account  which is
invested in the Deferred  Stock Unit Fund is increased by the number of Deferred
Stock Units which could be  purchased  with Common Stock  dividends  paid by the
Company.  With respect to investment  options other than the Deferred Stock Unit
Fund, the Company may, but is not required to, invest the deferred  amounts in a
Company-owned life insurance product with parallel investment  options.  Subject
to certain restrictions,  the Director may elect at the time of deferral to take
cash distributions,  in whole or in part, from his Deferral Account either prior
to or following termination of service.

         Pursuant to the Restricted  Stock Plan for  Non-Employee  Directors and
the 1997 Executive Stock Plan, each non-employee  Director is awarded 700 shares
of restricted Common Stock of the Company annually  following the Annual Meeting
of Shareholders. No Director may receive in the aggregate more than 2,100 shares
of  restricted  Common Stock under these plans.  The  restrictions  lapse in the
event the Director becomes disabled, dies, is not nominated for reelection or is
not  reelected.  The number of shares issued to  non-employee  Directors will be
adjusted for stock  dividends,  stock splits and certain other corporate  events
that may occur in the future.

         Under  the 1994  Stock  Option  Plan for  Non-Employee  Directors  (the
"Directors'  Option Plan"),  each  non-employee  Director  receives an option to
purchase  1,000 shares of Common Stock of the Company on the first  business day
following the Annual Meeting of Shareholders.  The exercise price of all options
granted under the Directors'  Option Plan is the fair market value of the Common
Stock on the date of grant.  All of the options  become  exercisable  six months
after the date of grant and  expire  ten years  from the date of grant.  Shorter
expiration  periods may


                                      -5-

<PAGE>

apply in the event an optionee  dies,  becomes  disabled or resigns from or does
not stand for reelection to the Board. A total of 100,000 shares of Common Stock
of the Company is authorized for issuance under the Directors'  Option Plan, and
the number of shares  authorized  and issued under the Plan will be adjusted for
stock dividends,  stock splits and certain other corporate events that may occur
in the future.

         As part of its overall program of charitable giving, the Company offers
the Directors participation in a Directors' Charitable Contribution Program. The
Program is funded by life  insurance  policies  purchased  by the Company on the
Directors.  The Directors  derive no financial or tax benefits from the Program,
because all insurance  proceeds and charitable  tax deductions  accrue solely to
the Company. However, following the death of a Director, the Company will donate
up to $1,000,000 to one or more qualifying charitable organizations  recommended
by that  Director.  The  donation(s)  will be made by the  Company  in ten equal
annual  installments,  with the first installment to be made at the later of the
Director's  retirement from the Board or age 70; the remaining nine installments
will be paid annually beginning immediately after the Director's death.

         Each Director is also eligible to participate in a Directors'  Matching
Gifts  Program  in  which  the  Company  matches  Directors'   contributions  to
charities.  The maximum amount which can be matched in any fiscal year is $5,000
per Director.

                   REPORT OF EXECUTIVE COMPENSATION COMMITTEE

         The  Company's   executive   compensation   and  benefits   program  is
administered by the Executive Compensation Committee (the "Committee"), which is
composed  entirely  of  non-employee  Directors.  The goal of the  program is to
attract,  motivate,  reward and retain the management talent required to achieve
the Company's  business  objectives,  at  compensation  levels that are fair and
equitable  and  competitive  with those of  comparable  companies.  This goal is
furthered by the  Committee's  policy of linking  compensation to individual and
corporate  performance and by encouraging  significant stock ownership by senior
management in order to align the financial interests of management with those of
the shareholders.

         The three  main  components  of the  Company's  executive  compensation
program  are  base  salary,   annual  cash  incentive  awards  under  Management
Performance  Plans  adopted  by the  Company  and its  subsidiaries  and  equity
participation  usually in the form of stock  option  grants and  eligibility  to
participate in the Employees'  Stock Purchase Plan of Universal  Leaf. Each year
the Committee reviews the total  compensation  package of each executive officer
to  ensure  it meets the goals of the  program.  As a part of this  review,  the
Committee considers corporate performance information, compensation survey data,
the advice of consultants and the recommendations of management.

         Base Salary. Base salaries for executive officers are reviewed annually
to determine  whether  adjustments may be necessary.  Factors  considered by the
Committee in determining  base salaries for executive  officers include personal
performance  of the executive in light of individual  levels of  responsibility,
the overall  performance and  profitability  of the Company during the preceding
year, economic trends that may be affecting the Company, and the competitiveness
of the  executive's  salary  with  the  salaries  of  executives  in  comparable
positions at companies of comparable size or operational  characteristics.  Each
factor is weighed by the Committee in a subjective  analysis of the  appropriate
level  of  compensation  for that  executive.  For  purposes  of  assessing  the
competitiveness  of  salaries,  the  Committee  reviews  compensation  data from
national  surveys  and  selected  groups  of  companies  with  similar  size  or
operational  characteristics  to determine ranges of total  compensation and the
individual  components of such


                                      -6-

<PAGE>

compensation.  Such compensation data indicates that the Company's salary levels
are below  the  median of such data when  compared  to  executive  positions  of
similar scope and responsibility.

         Mr. Harrell became the Chief  Executive  Officer of the Company in 1988
and Chairman of the Board of Directors in 1991 and has 32 years  experience with
the Company.  For the fiscal year  beginning  July 1, 1998,  Mr.  Harrell's base
salary was increased  approximately 4% after a thorough review and evaluation by
the Committee of the  competitiveness  of Mr. Harrell's salary to those of other
chief  executive  officers of  comparable  companies  and his  request  that any
percentage  increase  in his  1999  salary  not  exceed  the  Company's  average
percentage target for salary increases and promotion  adjustments for all of its
salaried employees.

         Annual Cash Incentives. The Company and its principal subsidiaries have
Management  Performance  Plans under which key management  employees may receive
annual cash incentive  awards which vary from year to year based upon corporate,
business unit and individual performance. At the Committee's discretion,  annual
awards based on  management's  recommendations  are paid to eligible  executives
from a "performance  fund" determined  primarily by the Company's pre-tax income
and after-tax  return on equity.  For the 1998 fiscal year,  with respect to the
named executive  officers based in the United States,  the fund was based on the
change in economic profit from the 1997 level,  where economic profit is defined
as consolidated  earnings before interest and taxes minus a capital charge equal
to the weighted  average  cost of capital  times  average  funds  employed.  Mr.
Harrell's cash incentive  award for the 1998 fiscal year was  approximately  60%
more than the award he received in 1997. Mr. Harrell's 1998 award was determined
by the  Committee  after  consideration  of the  Company's  record  earnings and
significant  improvement  in  economic  profit for the period,  the  Committee's
assessment of Mr. Harrell's individual  contributions to corporate  performance,
the  Company's  strategic  advances  during  the year and a review of total cash
compensation paid to chief executive officers of comparable companies.

         Equity Participation.  The Committee administers the Company's 1989 and
1997  Executive  Stock  Plans,  under  which  it has  granted  to key  executive
employees  options to purchase  shares the  Company's  Common Stock based upon a
determination  of  competitive   aggregate   compensation  levels.  The  primary
objective of issuing  stock  options is to encourage  significant  investment in
stock ownership by management and to provide long-term  financial rewards linked
directly to market  performance of the Company's stock.  The Committee  believes
that  significant  ownership  of stock by senior  management  is the best way to
align the interests of management and the shareholders,  and the Company's stock
incentive program is effectively designed to further this objective.

         In the 1998 fiscal year, the Committee granted 589,000 stock options to
15 key  executives  under a program  instituted  during the 1992  fiscal year to
promote an increase in the equity interest of such executives through systematic
option  exercises  and the  retention  of  shares.  The  program  requires  each
participant to make an investment in the Company by  contributing to the program
currently  owned shares equal to at least 10% of the number of shares subject to
the initial options granted the participant under the program.  Option exercises
occur automatically at not less than six-month intervals when at least a minimum
stock price  appreciation  has occurred.  48,000 shares of restricted stock were
also awarded in the 1998 fiscal year to executives  participating in the program
to match,  on a  one-for-one  basis,  shares of Common Stock held outside of and
contributed  by such  participants  to the  program  between  the award date and
December 15, 1997. The exercise price of the options  granted in the 1998 fiscal
year was the fair market value of the Common Stock on the date of grant.  All of
the options  cannot be  exercised  until six months  after the date of grant and
expire ten years from such date. On December 15, 1997,  Mr.  Harrell was awarded
7,800 shares of  restricted  stock to match the number of  additional


                                      -7-

<PAGE>

shares of Common Stock he  contributed  to the program on that date. In the 1998
fiscal  year,  he received an option grant for 120,000  shares of Common  Stock,
based upon a review by the Committee of total  compensation  and its components,
including  equity  participation,  of chief  executive  officers  of  comparable
companies.  Stock options granted to key executives in the 1998 fiscal year were
intended to meet the Committee's  two-year option grant targets and,  therefore,
it is anticipated that no new grants  (excluding reload options described below)
will be made during the fiscal year ending June 30, 1999.

         Except under extraordinary  circumstances or as otherwise determined by
the  Committee,  participants  have agreed that the  options  granted  under the
program  may be  exercised  only  through  stock-for-stock  swaps,  and both the
contributed shares and additional shares acquired through option exercises under
the program may not be sold by the participating  executives during the ten-year
option  term.   Each  option  granted  under  the  program   included  a  reload
replenishment  feature which entitles  participants  each time a stock-for-stock
exercise  occurs to receive  automatically a new option grant at the fair market
value of the Company's  Common Stock on the date of grant.  The number of reload
options granted is equal to the number of shares contributed by a participant to
effect a stock-for-stock swap. In exchange for this replenishment  feature, each
participant  has agreed to retain in the  program  shares  equaling at least the
after-tax gain realized upon each exercise.

         Tax  Considerations.  The  Omnibus  Budget  Reconciliation  Act of 1993
("OBRA  93")  established   certain  criteria  for  the  tax   deductibility  of
compensation in excess of $1 million paid to the Company's  executive  officers.
The  Company's   policy  is  generally  to  preserve  the  federal   income  tax
deductibility  of  compensation  paid.   Accordingly,   the  Company  has  taken
appropriate actions to preserve the deductibility of stock options.

         The  Committee  does not  propose  at the  present  time to  amend  the
Management  Performance Plans of the Company and its subsidiaries to comply with
the OBRA 93 requirements. The Committee expects that all compensation payable to
the Company's  executive  officers  during the fiscal year ending June 30, 1999,
will be deductible or voluntarily  deferred under the Company's  Deferred Income
Plan. Moreover,  the qualifying  amendments to the Management  Performance Plans
would  limit the  Committee's  discretion  to make  awards  based on  individual
performance factors and other factors as the Committee may determine,  from time
to time, to be relevant.  The Committee  believes that the flexibility to adjust
annual cash incentive  awards upward or downward is an important  feature of the
Management  Performance  Plans and one which  serves the best  interests  of the
Company by allowing the Committee to recognize and motivate individual executive
officers as circumstances warrant.

                                            Executive Compensation Committee
                                                     William W. Berry, Chairman
                                                     Ronald E. Carrier
                                                     Richard G. Holder


                                       -8-

<PAGE>

                                PERFORMANCE GRAPH

         The graph below compares the cumulative total return on Common Stock of
the Company for the last five fiscal years with the total return of the Standard
& Poors  Midcap 400 Stock Index and the Media  General  Tobacco  Industry  Group
Index assuming the investment of $100 on June 30, 1993, and the  reinvestment of
all dividends.






                               [PERFORMANCE GRAPH]




<TABLE>
<CAPTION>


                                                                          At June 30,
Data Points                             ----------------------------------------------------------------------------
in Dollars                                  1993          1994        1995        1996        1997         1998
                                            ----          ----        ----        ----        ----         ----
- --------------------------------------- ------------- ------------ ----------- ----------- ----------- -------------
<S>                                       <C>         <C>          <C>           <C>          <C>        <C>    
Universal Corporation                     $100.00     $   82.48    $  93.15      $122.72      $152.56    $184.68
- --------------------------------------- ------------- ------------ ----------- ----------- ----------- -------------
Media General Tobacco Index               $100.00     $  105.53    $ 147.31      $206.57      $270.78    $262.38
- --------------------------------------- ------------- ------------ ----------- ----------- ----------- -------------
S&P  Midcap 400 Index                     $100.00     $   99.76    $ 122.05      $145.80      $179.81    $228.63
- --------------------------------------- ------------- ------------ ----------- ----------- ----------- -------------
</TABLE>



                                       -9-

<PAGE>

                             EXECUTIVE COMPENSATION

         The  individuals  named below include the Company's  Chairman and Chief
Executive Officer and the other four executive  officers of the Company who were
the most  highly  compensated  executive  officers  of the  Company for the 1998
fiscal  year.  Information  is provided for the fiscal years ended on June 30 of
the years shown.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                  Long Term
                                                                                 Compensation
                                           Annual Compensation                      Awards
                                           -------------------                      ------
                        Fiscal
       Name              Year                                 Other         Restricted   Securities
   and Principal        Ended                                  Annual         Stock      Underlying      All Other
     Position            6/30     Salary($)  Bonus($)1   Compensation($)2    Awards($)   Options(#)   Compensation($)6
     --------            ----     ---------  ---------   ----------------   ----------   ----------   ----------------
<S>                      <C>      <C>         <C>                           <C>          <C>             <C>     
Henry H. Harrell         1998     $493,825    $813,636          --          $319,800 3   182,854 4       $100,609
Chairman and Chief       1997      479,779     510,000          --              0         27,167 5         84,971
Executive Officer        1996      454,845     383,000          --              0         21,783 5         84,092
                                                                                                       
                                                                                                       
Allen B. King            1998      368,399     590,793          --           239,850 3   136,380 4         57,204
President and Chief      1997      344,435     369,400          --              0         19,261 5         49,937
Operating Officer        1996      319,592     268,000          --              0         15,446 5         47,403
                                                                                                       
                                                                                                       
Jack M.M. van de         1998      252,500     377,000          --              0         17,000              0
Winkel                                                                                                 
Vice Chairman and                                                                                      
Executive Vice                                                                                         
President,                                                                                             
Deli Universal, Inc.                                                                                   
                                                                                                       
                                                                                                       
William L. Taylor        1998      285,200     293,011          --           147,600 3    83,430 4         45,095
Vice President and       1997      276,665     183,500          --              0         11,792 5         26,112
Chief Administrative     1996      274,320     140,000          --              0          9,457 5         35,859
Officer                                                                                                
                                                                                                       
                                                                                                       
Hartwell H. Roper        1998      210,200     216,015          --           133,250 3    74,889 4         25,677
Vice President and       1997      202,720     130,900          --              0         10,214 5         23,749
Chief Financial          1996      194,320     102,000          --              0          8,191 5         23,807
Officer                                                                                              
</TABLE>


- -----------------

         1 Cash  incentive   bonuses  awarded  by  the  Executive   Compensation
Committee under  Management  Performance  Plans of the Company and its principal
subsidiaries.

         2 None of the named executive  officers  received  perquisites or other
personal  benefits in excess of the lesser of $50,000 or 10% of his total salary
and bonus.

         3 The amounts in this column are the dollar  values,  based on a $41.00
closing  price of a share of Common Stock on December  15, 1997,  as reported on
the New York Stock  Exchange,  of the  following  number of shares of restricted
Common  Stock  awarded  as of such date to the  named  executive  officers:  Mr.
Harrell, 7,800 shares; Mr. King, 5,850 shares; Mr. Taylor, 3,600 shares; and Mr.
Roper,  3,250 shares.  The restricted  shares matched,  on a one-for-one  basis,
shares of Common Stock contributed by such executives to the automatic  exercise
program described above in "Report of Executive Compensation Committee" during a
limited period following the date of the award. On June 15, 1998, the restricted
shares were used for stock swap option  exercises  under the automatic  exercise
program.


                                      -10-

<PAGE>

         4 The  following  number of  options  granted  to the  named  executive
officers in the 1998 fiscal year were reload options granted under the automatic
exercise   program   described  above  in  "Report  of  Executive   Compensation
Committee":  Mr. Harrell,  62,854; Mr. King, 46,380; Mr. Taylor, 28,430; and Mr.
Roper, 24,889.

         5 The options granted to the named  executive  officers in the 1997 and
1996 fiscal  years were reload  options  granted  under the  automatic  exercise
program described above in "Report of Executive Compensation Committee."

         6 The  amounts in the "All Other  Compensation"  column  represent  (i)
employer  contributions  to the Employees'  Stock Purchase and the  Supplemental
Stock  Purchase  Plans of  Universal  Leaf (the "Stock  Purchase  Plans"),  (ii)
premium payments made by the Company under the Executive Insurance Program,  and
(iii) interest  accrued to participants'  accounts under the Company's  Deferred
Income Plan (the  "DIP") to the extent such  interest  exceeded  the  applicable
long-term  rate  under   Internal   Revenue  Code  Section   1274(d).   Employer
contributions  to the Stock  Purchase  Plans on  behalf  of the named  executive
officers  for the  1998,  1997  and  1996  fiscal  years  were in the  following
respective  amounts:  Mr.  Harrell,  $22,098,  $21,359 and  $20,437;  Mr.  King,
$18,000,  $17,100 and $15,900;  Mr.  Taylor,  $14,256,  $0 and $12,562;  and Mr.
Roper,  $9,300,  $9,099 and  $8,841.  The life  insurance  premiums  paid by the
Company on behalf of such executive  officers for the 1998, 1997 and 1996 fiscal
years were in the following  respective amounts: Mr. Harrell,  $70,327,  $55,633
and  $49,913;  Mr. King,  $37,704,  $30,082 and $26,323;  Mr.  Taylor,  $30,839,
$26,112 and $23,297; and Mr. Roper,  $15,170,  $13,357 and $11,722. The accruals
of  interest  on income  deferred by such  executive  officers  under the DIP in
excess of the  applicable  long-term  rate under  Internal  Revenue Code Section
1274(d)  for the  1998,  1997  and  1996  fiscal  years  were  in the  following
respective amounts: Mr. Harrell,  $8,184,  $7,979 and $13,742; Mr. King, $1,500,
$2,755 and $5,180; and Mr. Roper, $1,207, $1,293 and $3,244.

                               Retirement Benefits

         Employees of the Company and certain U.S. subsidiaries are covered by a
defined benefit  retirement  plan, which is qualified under the Internal Revenue
Code,  and  a  defined  benefit   supplemental   retirement  plan,  which  is  a
non-qualified  plan to  provide  benefits  in excess of  limits  allowed  by the
Internal  Revenue  Code.  The table below shows  estimated  annualized  benefits
payable  under both  plans at normal  retirement  (age 65) based on the  average
salary and bonus (as reported in the Summary Compensation Table) for the highest
consecutive  three  years.  The  actuarial  equivalent  of  benefits  under  the
supplemental retirement plan is payable in a lump sum upon retirement.



                                      -11-

<PAGE>


<TABLE>
<CAPTION>

                                                           Years of Service
                   --------------------------------------------------------------------------------------------------

Remuneration            15            20            25            30            35             40            45
- ---------------------------------------------------------------------------------------------------------------------
<S>                  <C>           <C>           <C>           <C>            <C>            <C>          <C>     
   $  300,000        $ 67,517      $ 90,023      $112,529      $135,035       $157,540       $170,977     $184,413
      400,000          91,031       121,375       151,718       182,062        212,405        230,320      248,235
      500,000         114,544       152,725       190,907       229,088        267,270        289,664      312,058
      600,000         138,058       184,077       230,096       276,115        322,135        349,007      375,880
      700,000         161,571       215,429       269,285       323,143        377,000        408,351      439,702
      800,000         185,085       246,780       308,475       370,170        431,865        467,695      503,525
      900,000         208,598       278,131       347,664       417,197        486,730        527,038      567,347
    1,000,000         232,112       309,482       386,853       464,224        541,595        586,382      631,170
    1,100,000         255,625       340,834       426,042       511,251        596,460        645,726      694,992
    1,200,000         279,139       372,185       465,231       558,278        651,324        705,070      758,815
    1,300,000         302,652       403,536       504,420       605,305        706,189        764,413      822,637
    1,400,000         326,166       434,888       543,610       652,332        761,054        823,756      886,459
    1,500,000         349,679       466,239       582,799       699,359        815,919        883,100      950,281
</TABLE>


         The credited  years of service for Messrs.  Harrell,  King,  Taylor and
Roper are thirty-two, twenty-nine, eight and twenty-four, respectively.

         The benefits  shown in the table are  calculated  on the basis of a 50%
joint  and  survivor  benefit,  assuming  that  at  retirement  the  age  of the
employee's spouse is 62. The social security benefit will be paid in addition to
the amounts shown in the table.

         Mr. van de Winkel is covered by a pension  plan  established  under the
laws of the Netherlands. The plan, which covers employees of N.V. Deli Universal
and certain  other  Dutch  subsidiaries,  is  partially  funded by employer  and
participant contributions. During the fiscal year ended June 30, 1998, N.V. Deli
Universal  contributed  $39,800 to the plan on behalf of Mr. van de Winkel.  His
estimated annual pension benefit under the plan assuming twenty years of service
would be $110,405.

                                  Stock Options

         The following  tables contain  information  concerning  grants of stock
options to executive  officers listed in the Summary  Compensation  Table during
the  fiscal  year  ended  June 30,  1998,  exercises  of stock  options  by such
executive  officers  in such fiscal  year and the fiscal  year-end  value of all
unexercised stock options held by such executive officers.


                                      -12-

<PAGE>

                                             Option Grants in Last Fiscal Year

<TABLE>
<CAPTION>
                                                     Individual Grants
                               ---------------------------------------------------------------
                                  Number of         % of Total
                                  Securities          Options        Exercise
                                  Underlying          Granted        or Base
                                   Options         to Employees       Price       Expiration      Grant Date
        Name                      Granted (#)     in Fiscal Year 2    ($/Sh)         Date       Present Value 3
        ----                      -----------     ----------------    ------         ----       ---------------
<S>                                <C>                 <C>           <C>           <C>            <C>       
Henry H. Harrell                   120,000             15.2%         $38.938       11/20/07       $1,461,000
                                    10,038 1            8.6           40.188       12/01/04          115,226
                                     9,050 1            7.8           40.188       12/01/01           83,658
                                    43,766 1           17.0           35.313       12/01/01          355,380
                                                                                  
                                                                                  
                                                                                  
Allen B. King                       90,000             11.4           38.938       11/20/07        1,095,750
                                    14,084 1           12.1           40.188       12/01/04          161,670
                                    17,925 1            6.9           35.313       12/01/04          180,792
                                    14,371 1            5.6           35.313       12/01/01          116,693
                                                                                  
Jack M.M. van de Winkel             17,000              2.2           38.938       11/20/02          166,617
                                                                                  
                                                                                  
William L. Taylor                   55,000              7.0           38.938       11/20/07          669,625
                                     8,622 1            7.4           40.188       12/01/04           98,972
                                    12,778 1            5.0           35.313       12/01/04          128,879
                                     7,030 1            2.7           35.313       12/01/01           57,084
                                                                                  
Hartwell H. Roper                   50,000              6.4           38.938       11/20/07          608,750
                                     7,468 1            6.4           40.188       12/01/04           85,702
                                    11,289 1            4.4           35.313       12/01/04          113,861
                                     6,132 1            2.4           35.313       12/01/01           49,792
</TABLE>

- ------------------                                                              

         1 These  options  were  reload  options  which  replaced  shares of the
Company's  Common Stock used for stock swap option exercises under the automatic
exercise   program   described  above  in  "Report  of  Executive   Compensation
Committee."

         2 The  percentage  is  computed  separately  for the grant of  original
options ($38.938 exercise price) and each grant of reload options.

         3 The  Black-Scholes  option  pricing  model was used to determine  the
"Grant Date Present Value" of the options listed in the table.  For options with
a $38.938  exercise  price and a 11/20/07  expiration  date, the model assumed a
risk free  interest rate of 5.84%,  a dividend  yield of 3.164% and a volatility
measure of .277, which is the variance on the rate of return of the Common Stock
of the Company over the most recent 250 trading day period prior to the grant of
the option. For options with a $40.188 exercise price and a 12/01/04  expiration
date,  the model assumed a risk free interest rate of 5.88%, a dividend yield of
3.135% and a volatility  measure of .276.  For options  with a $40.188  exercise
price and a 12/01/01  expiration  date,  the model  assumed a risk free interest
rate of 5.815%, a dividend yield of 3.135% and a volatility measure of .276. For
options with a $35.313 exercise price and a 12/01/01  expiration date, the model


                                      -13-

<PAGE>

assumed a risk free  interest rate of 5.810%,  a dividend  yield of 3.135% and a
volatility  measure of .276.  For options  with a $35.313  exercise  price and a
12/01/04 expiration date, the model assumed a risk free interest rate of 5.880%,
a dividend yield of 3.135% and a volatility  measure of .276. For options with a
$38.938 exercise price and a 11/20/02  expiration date, the model assumed a risk
free  interest  rate of  5.800%,  a dividend  yield of 3.164%  and a  volatility
measure of .277.  Because the  magnitude of any  nontransferability  discount is
extremely  difficult to determine,  none was applied in determining the value of
the listed  options.  The grant date  present  values set forth in the table are
only  theoretical  values and may not accurately  determine  present value.  The
actual  value,  if any, an optionee  will  realize  will depend on the excess of
market value of the Company's  Common Stock over the exercise  price on the date
the option is exercised.

                 Aggregated Option Exercises in Last Fiscal Year
                            And FY-End Option Values

<TABLE>
<CAPTION>

                                                             Number of Securities          Value of Unexercised
                                                            Underlying Unexercised         In-the-Money Options
                                                             Options at FY-End (#)            at FY-End ($)3
                                                             ---------------------            --------------

                         Shares Acquired       Value
Name                    on Exercise (#)1   Realized ($)2   Exercisable   Unexercisable   Exercisable  Unexercisable
- ----                    ----------------   -------------   -----------   -------------   -----------  -------------
<S>                          <C>              <C>            <C>            <C>           <C>            <C>    
Henry H. Harrell             85,751           $858,367       195,103        43,766        $405,878       $90,267
Allen B. King                71,315            940,338       177,017        32,296         643,709        66,611
William L. Taylor            44,341            598,487       109,167        19,808         388,486        40,854
Hartwell H. Roper            38,824            523,826        98,218        17,421         364,701        35,931
</TABLE>

- -----------------    

         1 Except for 30,000 shares of the Company's  Common Stock  representing
the gross number of shares  acquired by Mr.  Harrell as the result of a cashless
exercise of options, the number of shares of the Company's Common Stock included
in this column  represents  the gross  amount of shares  issued in exchange  for
shares  already  owned  by the  officers  listed  in the  table  used to pay the
exercise  price of  options  exercised  by them in the  last  fiscal  year.  The
following is the net amount of shares of Common Stock  acquired by each of these
officers as a result of such  exercises,  after deducting  already-owned  shares
swapped but including shares sold to pay taxes: Mr. Harrell,  22,897 shares; Mr.
King, 24,935 shares; Mr. Taylor, 15,911 shares; and Mr. Roper, 13,935 shares.

         2 The value realized  represents  the  difference  between the exercise
price of the option and the fair market value of the  Company's  Common Stock on
the date of exercise.

         3 The value of the unexercised  options at fiscal  year-end  represents
the  difference  between  the  exercise  price of any  outstanding  options  and
$37.375,  the closing  sales price of a share of the  Company's  Common Stock on
June 30, 1998, as reported on the New York Stock Exchange.

         Of the  options  shown as of the  fiscal  year end,  options on 238,869
shares for Mr.  Harrell,  206,813  shares for Mr. King,  128,975  shares for Mr.
Taylor  and  114,039   shares  for  Mr.   Roper,


                                      -14-

<PAGE>

except under extraordinary circumstances,  are only exercisable automatically at
not  less  than  six  month  intervals  when at  least  a  minimum  stock  price
appreciation has occurred.

                             Contractual Obligations

         To ensure that the Company will have the continued dedicated service of
certain executives  notwithstanding  the possibility,  threat or occurrence of a
change of control,  the Company  has entered  into change of control  employment
agreements (the  "Employment  Agreements")  with certain  executives,  including
Henry H. Harrell,  Allen B. King,  William L. Taylor and Hartwell H. Roper.  The
Employment  Agreements  generally  provide that if the  executive is  terminated
other  than for  cause  within  three  years  after a change of  control  of the
Company,  or if the executive  terminates  his employment for good reason within
such  three-year  period or voluntarily  during the 30-day period  following the
first anniversary of the change of control, the executive is entitled to receive
"severance  benefits."  Severance  benefits include a lump sum severance payment
equal to three  times  the sum of his base  salary  and  highest  annual  bonus,
together with certain other  payments and benefits,  including  continuation  of
employee welfare benefits and an additional  payment to compensate the executive
for certain excise taxes imposed on certain change of control payments.

         The Board of Directors believes that the Employment  Agreements benefit
the  Company  and its  shareholders  by securing  the  continued  service of key
management  personnel  and by  enabling  management  to  perform  its duties and
responsibilities without the distracting uncertainty associated with a change of
control.

                     Certain Transactions and Relationships

         In  December  1997,  the Company  made  unsecured  loans to  executives
participating in the automatic  exercise  program  described above in "Report of
Executive  Compensation  Committee"  for the purchase  price of shares of Common
Stock  purchased by the  executives and  contributed  to the automatic  exercise
program.  Interest  on the  stock  purchase  loans is  payable  annually  at the
applicable  federal rate for demand loans.  All accrued and unpaid  interest and
all unpaid  principal  on the loans is due and  payable  upon the earlier of (i)
demand by the Company or (ii) termination of the automatic exercise program. The
stock purchase loans made by the Company to executive officers,  and the balance
thereof  outstanding  as of June  30,  1998,  were in the  following  respective
amounts: Mr. Harrell,  $318,606; Mr. King, $238,955;  Mr. Taylor,  $147,049; and
Mr. Roper, $132,753.

         In  December   1997,   the  Company  also  made  loans  to   executives
participating  in the automatic  exercise program for the payment of withholding
taxes on the award to such executives of restricted  Common Stock to match, on a
one-for-one  basis,  additional  shares  of  Common  Stock  contributed  by  the
executives  to the program  during a limited  period  following  the date of the
award.  Interest on the tax payment loans is payable quarterly at the applicable
federal  rate for demand  loans for the quarter for which the  interest  payment
relates,  from dividends paid on the restricted  Common Stock.  Principal on the
loans is paid from the  proceeds  of sale of  one-half  of the  shares of Common
Stock  representing  the after-tax  gain on each  automatic  exercise of options
covered  by grants  made  under the  program  in 1997.  All  accrued


                                      -15-

<PAGE>

and unpaid  interest  and all unpaid  principal  on the loans is due and payable
upon the earlier of (i) the date the automatic  exercise  program  terminates or
(ii) November 20, 2007. On the loan maturity  date,  shares of Common Stock held
for  executives  under the  automatic  exercise  program  may be sold to pay the
Company the amount then due and payable to the Company under the loans.  The tax
payment  loans made by the Company to executive  officers  were in the following
respective  amounts:  Mr. Harrell,  $149,666;  Mr. King,  $112,250;  Mr. Taylor,
$69,077;  and Mr. Roper,  $62,361.  The balance of such loans  outstanding as of
June 30, 1998 were in the following  respective amounts:  Mr. Harrell,  $30,487;
Mr. King, $0; Mr. Taylor, $0; and Mr. Roper, $0.

         In January 1998,  the Company  purchased  10,614 shares of Common Stock
from Mr.  Harrell at a price of $43.88 per share,  the fair market  value on the
date of  purchase,  in a  transaction  preapproved  by the  Company's  Board  of
Directors.  Proceeds of the purchase were applied by Mr.  Harrell to the payment
of income  taxes on the  exercise of  transferable  options by his family  trust
resulting  in an increase in the total number of shares of Common Stock owned by
Mr. Harrell and his family.

         Baker, Donelson,  Bearman & Caldwell, the law firm to which Lawrence S.
Eagleburger  serves as Senior Foreign Policy  Advisor,  is retained from time to
time to provide legal services to the Company and its subsidiaries.

                                  Proposal Two

              AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
             TO INCREASE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK

         The Board of Directors has unanimously approved,  and recommends to the
shareholders  that they adopt,  an  amendment  to Article IV of the  Articles of
Incorporation that would increase the authorized Common Stock from 50 million to
100 million shares.

         Of the 50 million  currently  authorized  shares of Common Stock, as of
June 30, 1998,  34,866,406  shares were issued and  outstanding.  The additional
shares of Common Stock for which  authorization is sought would be a part of the
existing  class of Common  Stock and,  if and when  issued,  would have the same
rights and privileges as the shares of Common Stock  presently  outstanding.  No
holder of Common Stock has any preemptive  rights.  The Company has no plans for
the issuance of any shares of Common Stock at the present time.

         The full text of Proposal  Two is attached to this Proxy  Statement  as
Exhibit A, which shareholders are urged to read carefully.

Purposes and Effects of Proposal Two

         The Board of  Directors  believes  that an  increase  in the  number of
shares of authorized  Common Stock as contemplated by Proposal Two would benefit
the Company and its shareholders by giving the Company needed flexibility in its
corporate planning and in responding to developments in the Company's  business,
including possible acquisition


                                      -16-

<PAGE>

transactions,  stock  splits  or stock  dividends  and other  general  corporate
purposes.  Having such  authorized  shares  available for issuance in the future
would give the Company greater  flexibility and allow shares of its Common Stock
to be issued without the expense and delay of a special shareholders' meeting.

         Unless otherwise  required by applicable law or regulation,  the shares
of Common  Stock to be  authorized  in  Proposal  Two will be  issuable  without
further  shareholder  action and on such terms and for such consideration as may
be determined by the Board of Directors.  However,  the New York Stock Exchange,
on which the Company's Common Stock is listed,  currently  requires  shareholder
approval as a  prerequisite  to listing shares in several  instances,  including
acquisition  transactions,  where the  present or  potential  issuance of shares
could  result in an  increase  of 20  percent or more in the number of shares of
Common Stock outstanding.

         The Board of Directors could use the additional  shares of Common Stock
to discourage an attempt to change control of the Company,  even though a change
in control  might be perceived as desirable by some  shareholders,  by selling a
substantial  number of shares of Common Stock to persons who have an arrangement
with the Company concerning the voting of such shares, or by distributing Common
Stock,  or rights to  receive  such  stock,  to the  shareholders.  The Board of
Directors,  however,  has no present  intention  of issuing any shares of Common
Stock or rights to  acquire  Common  Stock for such  purposes,  and there are no
arrangements  with any person for the  purchase of shares of Common Stock in the
event of an attempted change of control.

Vote Required

         In order for it to be  adopted,  Proposal  Two must be  approved by the
holders of a majority of the shares of Common Stock  present or  represented  by
properly executed and delivered  proxies at the Annual Meeting.  Abstentions and
Broker  Shares voted as to any matter at the Annual  Meeting will be included in
determining  the number of shares present or represented at the Annual  Meeting.
Broker Shares that are not voted on any matter at the Annual Meeting will not be
included  in  determining  the number of shares  present or  represented  at the
Annual Meeting.

         The Board of Directors  recommends that the shareholders  vote in favor
of Proposal Two.

                         INDEPENDENT PUBLIC ACCOUNTANTS

         The  independent  auditors of the Company are appointed by the Board of
Directors upon the recommendation of the Audit Committee. Ernst & Young LLP, the
Company's independent auditor since 1971, has been appointed for the next fiscal
year.  Representatives  of  Ernst & Young  LLP  will be  present  at the  Annual
Meeting,  will be available to respond to  appropriate  questions and may make a
statement if they so desire.


                                      -17-

<PAGE>

                        PROPOSALS FOR 1999 ANNUAL MEETING

         Under the  regulations of the Securities and Exchange  Commission,  any
shareholder  desiring  to make a proposal  to be acted  upon at the 1999  Annual
Meeting of  Shareholders  must cause such  proposal to be  delivered,  in proper
form,  to the  Secretary of the  Company,  whose  address is Hamilton  Street at
Broad, P.O. Box 25099, Richmond,  Virginia 23260, no later than May 27, 1999, in
order for the proposal to be considered  for  inclusion in the  Company's  Proxy
Statement.  The Company  anticipates  holding the 1999 Annual Meeting on October
26, 1999.

         The Company's  Bylaws also  prescribe the procedure a shareholder  must
follow to nominate  Directors or to bring other  business  before  shareholders'
meetings.  For a  shareholder  to nominate a candidate  for Director or to bring
other business before a meeting, notice must be received by the Secretary of the
Company not less than 60 days and not more than 90 days prior to the date of the
meeting.  Based upon an anticipated date of October 26, 1999 for the 1999 Annual
Meeting of  Shareholders,  the Company  must  receive  such notice no later than
August 27, 1999 and no earlier  than July 28, 1999.  Notice of a nomination  for
Director must describe various matters regarding the nominee and the shareholder
giving the notice.  Notice of other  business  to be brought  before the meeting
must include a description of the proposed business,  the reasons therefor,  and
other  specified  matters.  Any  shareholder  may obtain a copy of the Company's
Bylaws, without charge, upon written request to the Secretary of the Company.

                                  OTHER MATTERS

         THE  COMPANY'S  ANNUAL  REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 1998,
INCLUDING FINANCIAL STATEMENTS,  IS BEING MAILED TO SHAREHOLDERS WITH THIS PROXY
STATEMENT.  A COPY OF THE  COMPANY'S  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED JUNE 30, 1998,  FILED WITH THE  SECURITIES  AND EXCHANGE  COMMISSION,
EXCLUDING  EXHIBITS,  CAN BE OBTAINED  WITHOUT  CHARGE BY WRITING TO KAREN M. L.
WHELAN,  VICE PRESIDENT AND TREASURER,  UNIVERSAL  CORPORATION,  P.O. BOX 25099,
RICHMOND, VIRGINIA 23260.



                                      -18-

<PAGE>

                                                                       EXHIBIT A



                                  Proposal Two


              AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
             TO INCREASE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK


         Article  IV of the  Articles  of  Incorporation  is hereby  amended  by
revising the first paragraph to read as follows:


                  The   maximum   amount  of   capital   stock  of  the
         Corporation  shall be one  hundred-five  million  seventy-five
         thousand  (105,075,000) shares, of which seventy-five thousand
         (75,000)  shares,  of the par  value  of One  Hundred  Dollars
         ($100.00)  each and a total  par value of Seven  Million  Five
         Hundred Thousand Dollars ($7,500,000),  shall be eight percent
         (8%) Cumulative  Preferred Stock ("8% Preferred Stock"),  five
         million  (5,000,000)  shares,  without  par  value,  shall  be
         Additional   Preferred   Stock,   and  one   hundred   million
         (100,000,000)  shares,  without  par  value,  shall be  Common
         Stock.





                                      A-1

<PAGE>
                              UNIVERSAL CORPORATION

           This Proxy is Solicited on Behalf of the Board of Directors

The undersigned  hereby appoints Henry H. Harrell,  Allen B. King and William L.
Taylor,  and each or any of them,  proxies  for the  undersigned,  with power of
substitution,  to vote all the shares of Common Stock of  Universal  Corporation
held of record by the undersigned on September 8, 1998, at the Annual Meeting of
Shareholders  to be  held  at  2:00  p.m.  on  October  27,  1998,  and  at  any
adjournments thereof, upon the matters listed on the reverse side, as more fully
set forth in the Proxy Statement, and for the transaction of such other business
as may properly come before the Meeting.

THIS PROXY, WHEN PROPERLY EXECUTED,  WILL BE VOTED IN THE MANNER DIRECTED ON THE
REVERSE SIDE BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES AND FOR PROPOSAL 2.


- --------------------------------------------------------------------------------
            PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
                           IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------

Please sign exactly as your name(s) appear(s) on this Proxy.  Attorneys-in-fact,
executors, trustees, guardians, corporate officers, etc. should give full title.

- --------------------------------------------------------------------------------


HAS YOUR ADDRESS CHANGED?                   DO YOU HAVE ANY COMMENTS?

- -------------------------------             --------------------------------

- -------------------------------             --------------------------------

- -------------------------------             --------------------------------




             (continued, and to be DATED and SIGNED on reverse side)



<PAGE>


<TABLE>
<CAPTION>
<S>                                                  <C>
|X|      PLEASE MARK VOTES
         AS IN THIS EXAMPLE

- ----------------------------------------------------

               UNIVERSAL CORPORATION                 1. Election of Directors.                      For All                 For All
                                                                                                   Nominees     Withhold    Except
- ----------------------------------------------------
                                                                        Charles H. Foster, Jr.         _           _           _
                   COMMON STOCK                                         Allen B. King                 |_|         |_|         |_|
                                                                        Jeremiah J. Sheehan
                                                                        Joseph C. Farrell


                                                     INSTRUCTION: To withhold authority to vote for any individual nominee, mark the
                                                     "For All Except" box and strike a line through the name(s) of the nominee(s).
RECORD DATE SHARES:

                                                     2.  Proposal  to  increase to 100 million the    For       Against     Abstain
                                                         number  of  authorized  shares  of Common     _           _           _
                                                         Stock.                                       |_|         |_|         |_|
                                                                                                       

                                            --------                                                                           _
Please be sure to sign and date this Proxy.  Date    Mark box at right if an address  change or  comment  has been noted on   |_|
- ------------------------------------------- -------- the reverse side of this card.



Shareholder sign here          Co-owner sign here
- ---------------------------------------------------




DETACH CARD                                                                                                              DETACH CARD

</TABLE>



<PAGE>


                              UNIVERSAL CORPORATION

                  TO TRUSTEE, LANDAMERICA FINANCIAL GROUP, INC.
                        SAVINGS AND STOCK OWNERSHIP PLAN

   This Voting Instruction is Solicited on Behalf of the Board of Directors of
                              Universal Corporation

Pursuant to Section 10.5 of the LandAmerica  Financial  Group,  Inc. Savings and
Stock Ownership Plan, you are directed to vote, in person or by proxy, the whole
shares of Common  Stock of  Universal  Corporation  credited to the  undersigned
Participant's Account as of June 30, 1998, at the Annual Meeting of Shareholders
of Universal  Corporation,  to be held at 2:00 p.m. on October 27, 1998,  and at
any adjournments  thereof,  upon the matters listed on the reverse side, as more
fully set forth in the Proxy  Statement,  and for the  transaction of such other
business as may properly come before the Meeting.

THIS VOTING  INSTRUCTION  WHEN  PROPERLY  EXECUTED,  WILL BE VOTED IN THE MANNER
DIRECTED ON THE REVERSE SIDE BY THE UNDERSIGNED PARTICIPANT.  IF NO DIRECTION IS
MADE, OR IF A VOTING  INSTRUCTION  IS NOT PROPERLY  EXECUTED AND RECEIVED BY THE
TRUSTEE,  THE SHARES OF  UNIVERSAL  CORPORATION  COMMON  STOCK  CREDITED TO YOUR
PARTICIPANT'S  ACCOUNT SHALL BE VOTED IN THE SAME  PROPORTION AS THOSE SHARES OF
UNIVERSAL  CORPORATION  COMMON STOCK FOR WHICH THE TRUSTEE HAS  RECEIVED  PROPER
VOTING INSTRUCTIONS WITH RESPECT TO PROPOSALS 1 AND 2.


- --------------------------------------------------------------------------------
            PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
                           IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------

    Please sign exactly as your name(s) appear(s) on this Voting Instruction.

- --------------------------------------------------------------------------------



HAS YOUR ADDRESS CHANGED?                   DO YOU HAVE ANY COMMENTS?

- -------------------------------             --------------------------------

- -------------------------------             --------------------------------

- -------------------------------             --------------------------------




             (continued, and to be DATED and SIGNED on reverse side)




<PAGE>


<TABLE>
<CAPTION>
<S>                                                  <C>
|X|      PLEASE MARK VOTES
         AS IN THIS EXAMPLE

- ----------------------------------------------------

               UNIVERSAL CORPORATION                 1. Election of Directors.                      For All                 For All
                                                                                                   Nominees     Withhold    Except
- ----------------------------------------------------
                                                                        Charles H. Foster, Jr.         _           _           _
         LANDAMERICA FINANCIAL GROUP, INC.                              Allen B. King                 |_|         |_|         |_|
         SAVINGS AND STOCK OWNERSHIP PLAN                               Jeremiah J. Sheehan
                                                                        Joseph C. Farrell


                                                     INSTRUCTION: To withhold authority to vote for any individual nominee, mark the
                                                     "For All Except" box and strike a line through the name(s) of the nominee(s).
RECORD DATE SHARES:

                                                     2.  Proposal  to  increase to 100 million the    For       Against     Abstain
                                                         number  of  authorized  shares  of Common     _           _           _
                                                         Stock.                                       |_|         |_|         |_|
                                                                                                       

                                           --------                                                                             _ 
Please be sure to sign and date this         Date    Mark box at right if an address  change or  comment  has been noted on    |_|
Voting Instruction.                                  the reverse side of this card.
- ------------------------------------------ --------  



Participant sign here
- ---------------------------------------------------




DETACH CARD                                                                                                              DETACH CARD

</TABLE>



<PAGE>

                              UNIVERSAL CORPORATION


          TO TRUSTEE, EMPLOYEES' STOCK PURCHASE PLAN OF UNIVERSAL LEAF
        TOBACCO COMPANY, INCORPORATED AND DESIGNATED AFFILIATED COMPANIES

   This Voting Instruction is Solicited on Behalf of the Board of Directors of
                              Universal Corporation

Pursuant to Section  13.01 of the  Employees'  Stock  Purchase Plan of Universal
Leaf Tobacco Company,  Incorporated and Designated Affiliated Companies, you are
directed to vote,  in person or by proxy,  the whole  shares of Common  Stock of
Universal  Corporation credited to the undersigned  Participant's  Account as of
July 31, 1998, at the Annual Meeting of Shareholders  of Universal  Corporation,
to be held at 2:00 p.m. on October 27, 1998,  and at any  adjournments  thereof,
upon the  matters  listed on the  reverse  side,  as more fully set forth in the
Proxy Statement,  and for the transaction of such other business as may properly
come before the Meeting.

THIS VOTING  INSTRUCTION,  WHEN PROPERLY  EXECUTED,  WILL BE VOTED IN THE MANNER
DIRECTED ON THE REVERSE SIDE BY THE UNDERSIGNED PARTICIPANT.  IF NO DIRECTION IS
MADE, OR IF A VOTING  INSTRUCTION  IS NOT PROPERLY  EXECUTED AND RECEIVED BY THE
TRUSTEE,  THE SHARES OF  UNIVERSAL  CORPORATION  COMMON  STOCK  CREDITED TO YOUR
PARTICIPANT'S  ACCOUNT SHALL BE VOTED IN THE SAME  PROPORTION AS THOSE SHARES OF
UNIVERSAL  CORPORATION  COMMON STOCK FOR WHICH THE TRUSTEE HAS  RECEIVED  PROPER
VOTING INSTRUCTIONS WITH RESPECT TO PROPOSALS 1 AND 2.



- --------------------------------------------------------------------------------
            PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
                           IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------

    Please sign exactly as your name(s) appear(s) on this Voting Instruction.

- --------------------------------------------------------------------------------



HAS YOUR ADDRESS CHANGED?                   DO YOU HAVE ANY COMMENTS?

- -------------------------------             --------------------------------

- -------------------------------             --------------------------------

- -------------------------------             --------------------------------


             (continued, and to be DATED and SIGNED on reverse side)



<PAGE>


<TABLE>
<CAPTION>
<S>                                                  <C>
|X|      PLEASE MARK VOTES
         AS IN THIS EXAMPLE

- ----------------------------------------------------

               UNIVERSAL CORPORATION                 1. Election of Directors.                      For All                 For All
                                                                                                   Nominees     Withhold    Except
- ----------------------------------------------------
                                                                        Charles H. Foster, Jr.         _           _           _
  EMPLOYEES' STOCK PURCHASE PLAN OF UNIVERSAL LEAF                      Allen B. King                 |_|         |_|         |_|
    TOBACCO COMPANY, INCORPORATED AND DESIGNATED                        Jeremiah J. Sheehan
                AFFILIATED COMPANIES                                    Joseph C. Farrell
         

                                                     INSTRUCTION: To withhold authority to vote for any individual nominee, mark the
                                                     "For All Except" box and strike a line through the name(s) of the nominee(s).
RECORD DATE SHARES:

                                                     2.  Proposal  to  increase to 100 million the     For       Against     Abstain
                                                         number  of  authorized  shares  of Common      _           _           _
                                                         Stock.                                        |_|         |_|         |_|
                                                                                                       

                                           --------                                                                             _ 
Please be sure to sign and date this         Date    Mark box at right if an address  change or  comment  has been noted on    |_|
Voting Instruction.                                  the reverse side of this card.
- ------------------------------------------ --------  



Participant sign here
- ---------------------------------------------------




DETACH CARD                                                                                                              DETACH CARD

</TABLE>