**Exhibit 10.32**

 

**TODHUNTER INTERNATIONAL, INC.**

**222 LakeviewAvenue, Suite 1500**

**West PalmBeach, FL 33401**

 

**SALARYCONTINUATION PLAN AGREEMENT**

 

**THIS SALARYCONTINUATION PLAN AGREEMENT** (this “Agreement” or the “Plan”) is entered into this **20thday of February 2004,** between Todhunter International,Inc., a Delaware corporation (hereinafter referred to as the “Corporation”),and **ThomasA. Valdes** (the “Executive”).

 

**WITNESSETH**:

 

**WHEREAS**, the Executive is employed by theCorporation; and

 

**WHEREAS**, the Corporation recognizes the valuableservices performed by the Executive and wishes to encourage his continuedemployment; and

 

**WHEREAS**, the Executive wishes to be assured that(i) he will be entitled to a certain amount of additional compensation for somedefinite period of time from and after his retirement from active service withthe Corporation or other termination of his employment; (ii) he will beentitled to a disability benefit in the event of his disability; and (iii) hisestate will be entitled to a death benefit after the Executive’s death if suchdeath occurs during the Executive’s employment with the Corporation; and

 

**WHEREAS**, the parties hereto wish to provide theterms and conditions upon which the Corporation shall pay such retirementbenefit, disability benefit or death benefit; and

 

**WHEREAS**, the parties hereto intend that thisAgreement be considered an un-funded arrangement, maintained primarily toprovide deferred compensation benefits for the Executive, a member of a selectgroup of management or highly compensated Executives of the Corporation, forpurposes of the Employee Retirement Security Act of 1974, as amended (“ERISA”);

 

**NOW THEREFORE**, in consideration of the premises and ofthe mutual promises herein contained, the parties hereto agree as follows:

 

**1.****                                     ****Retirement Benefit**.

 

A.                                   From and after termination of theExecutive’s employment, after the attainment of age 65, other than by reason ofhis death, the Corporation shall thereafter pay the Executive the sum of **$76,517.00**per annum for a period of fifteen (15) years, payable in equal monthlyinstallments, commencing with the first day of the month following suchtermination. Retirement prior to age 65 with the consent of the Corporationshall result in a retirement benefit based on a fraction, the denominator ofwhich is anticipated years of service to age 65 from **June 9, 1998** andthe numerator of which is actual years of service from such date.  The fraction so derived shall be applied tothe above stated retirement benefit resulting in the reduced early retirementbenefit.

 

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B.                                     In the event of the Executive’s death aftertermination of his employment, but prior to the expiration of said fifteen (15)year period, the Corporation shall continue to make said payments during theremainder of said fifteen (15) year period to the Executive’s estate.

 

**2.****                                     ****Death Benefit**. The Executive and the Corporation have entered into an EndorsementSplit-Dollar Agreement dated **February 20, 2004** that providesfor the payment of certain death benefits to the Executive’s estate if theExecutive dies while such Endorsement Split-Dollar Agreement is in force.  It is the intent of the Corporation and theExecutive that: (A) in all events the Endorsement Split-Dollar Agreement willbe cancelled and no death benefit will be paid to the Executive’s estate oncethe executive becomes entitled to receive the retirement benefit payments setforth in Paragraph 1.A; and (B) the Executive will be entitled to receive thedeath benefits set forth in Endorsement Split-Dollar Agreement only if he dieswhile such agreement is in force, that is during the Executive’s employmentwith the Corporation or after a Change in Control provided the Executive hasnot become entitled to receive the retirement benefit payments set forth inParagraph 1.A.

 

**3.****                                     ****Disability Benefit**.  Inthe event that the Executive becomes “permanently and totally disabled,” withinthe meaning of § 22 (e)(3) of the Internal Revenue Code of 1986, asamended (the “Code”), as determined by the Corporation, while in the employ ofthe Corporation, the Corporation shall pay the Executive a disability benefitin substantially equal installments over a period of sixty (60) months. Theamount of such monthly disability benefit shall be equal to 1/60 of the annualretirement benefit which would be payable to the Executive under Paragraph 1 ofthis Agreement, multiplied by the number of complete consecutive twelve monthperiods beginning on **June 9, 1998**, provided howeverthat such disability income benefit is not to exceed 100% of the retirementbenefit stated in Paragraph 1 above. Such monthly payments shall commencewithin thirty (30) days following the Corporation’s determination ofdisability. In the event of the death of the Executive after monthly paymentsunder this paragraph have commenced, but before expiration of the sixty (60)month period, the unpaid balance of payments shall continue to be paid by theCorporation to the Executive’s estate.

 

**4.****                                     ****Acceleration of BenefitPayments**.  Notwithstanding the provisions set forth inParagraphs 1 or 3 of this Agreement, the Corporation may elect to acceleratethe payment of any amounts listed in such Paragraphs and make payment in a lumpsum equal to the net present value of such payments discounted at an interestrate equal to the thirty (30) year U.S. Treasury Bill rate at the time of suchproposed payment, without the consent of the Executive or the Executive’sestate, in full satisfaction of the Corporation’s obligations under Paragraph 1or 3 of this Agreement, as the case may be.

 

**5.****                                      Forfeiture of Rights and Benefits**.  All rights and benefits under this Agreementshall be forfeited if the Executive violates the prohibitions set forth in theemployment agreement between the Executive and the Corporation in effect as ofthe date of this Agreement relating to the disclosure of confidentialinformation or the restriction of competition with the Corporation.  In the event there is no employmentagreement between the Executive and the Corporation on the date of thisAgreement, all rights and benefits under this Agreement shall be forfeited ifthe Executive engages in any of the following proscribed activities during thetwo (2) year period beginning upon the occurrence of any event described inParagraph 1 or 3 (the “Date of Termination”). Executive will not, directly or indirectly: (i) engage in any trade orbusiness in the liquor

 

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industry, relating to the manufacturing or national marketing of anybrand of distilled spirits, anywhere in the United States or such other countryor countries in which the Corporation or any of its Subsidiaries (as definedbelow) actively engages in its trade or business as of the Date of Termination(“Territory”);  (ii) become associated as a manager, supervisor,employee, consultant, advisor, control shareholder (either individually or aspart of an affiliated group), or otherwise of any person, corporation or entityengaging in any capacity in such segment of the liquor industry anywhere in theTerritory;  (iii) call upon any clientor clients of the Corporation or any of its Subsidiaries for the purpose ofselling or soliciting for any person, corporation or entity, other than any ofthe Corporation or its Subsidiaries, sales of any products, processes, or servicesin any capacity in such segment of the liquor industry within theTerritory;  (iv) divert, solicit or takeaway any such client or clients of the Corporation or any of its Subsidiariesfor the purpose of selling any products or services in any capacity in suchsegment of the liquor industry; and service any contracts or accounts relatingto any products or services in any capacity in such segment of the liquorindustry for any person, corporation or entity other than the Corporation orany of its Subsidiaries; or  (v) induce,influence, combine or conspire with, or attempt to induce, influence, combineor conspire with, any of the officers or employees of the Corporation or any ofits Subsidiaries to terminate his or her employment with or to compete againstthe Corporation or any of its Subsidiaries in any capacity in such segment ofthe liquor industry.  The Executiveshall not at any time disclose any confidential or trade secret of theCorporation or any of its Subsidiaries or any client of the Corporation or anyof its Subsidiaries, or utilize such confidential information or trade secretfor the Executive’s own benefit, or for the benefit of third parties.  The term “confidential information or tradesecret of the Corporation or any client of the Corporation” does not includeany information which becomes generally available to the public other than bybreach of this provision.  The Executivemay disclose confidential information where such disclosure is required byapplicable law or court process (but only after giving the Corporation writtennotice so that the Corporation may attempt to obtain a protective order).  For purposes of this paragraph, the term“Subsidiaries” shall mean and include any entities in which the Corporationowns, directly or indirectly, ten percent (10%) or more of the outstandingequity interests as of the Date of Termination.

 

**6.****                                     ****No Trust Created**. Nothing contained in this Agreement, and no action taken pursuant to itsprovisions by either party hereto, shall create, nor be construed to create, atrust of any kind or a fiduciary relationship between the Corporation and theExecutive or any other person.

 

**7.****                                     ****Unsecured General CreditorStatus of the Executive**.

 

A.                                   The payments to the Executive or his estateshall be made from assets which shall continue, for all purposes, to be a partof the general, unrestricted assets of the Corporation.  No person shall have nor acquire anyinterest in any such assets by virtue of the provisions of this Agreement.  The Corporation’s obligation hereunder shallbe an unfunded and unsecured promise to pay money in the future.  To the extent that the Executive or anyperson acquires a right to receive payments from the Corporation under theprovisions hereof, such right shall be no greater than the right of anyunsecured general creditor of the Corporation. No such person shall have nor require any legal or equitable right,interest or claim in or to any property or assets of the Corporation.

 

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B.                                     In the event that, in its discretion, theCorporation purchases an insurance policy or policies insuring the life of theExecutive (or any other property) to allow the Corporation to recover the costof providing the benefits, in whole or in part, hereunder, neither theExecutive, his personal representative, legal representative, successors andpermitted assigns, nor any other person have nor acquire any rights whatsoevertherein or in the proceeds therefrom, except as set forth in the Endorsement Split-DollarAgreement between the Corporation and the Executive dated **February 20, 2004**.  The Corporation shall be the sole owner andbeneficiary of any such policy or policies and, as such, shall possess and, mayexercise all incidents of ownership therein. No such policy, policies, or other property shall be held in trusteither for the Executive or any other person or as collateral security for anyobligation of the Corporation hereunder.

 

**8.****                                     ****No Contract of Employment**. Nothing contained herein shall be construed to be a contract ofemployment for any term of years, nor as conferring upon the Executive theright to continue to be employed by the Corporation, in any capacity.

 

**9.****                                     ****Termination of Agreement**. This Agreement shall be cancelled and shall terminate upon thetermination of the Executive’s employment with the Corporation for any reasonother than the reasons described in paragraphs 1, 2, or 3 of this Agreement.

 

**10.****                              ****Termination of Agreement inConnection with a Change in Control**.

 

A.                                   Notwithstanding anything in this Agreementto the contrary, unless the Executive is terminated “for cause,” as defined inParagraph 10.C. of this Agreement, the Corporation may not terminate thisAgreement without the consent of the Executive during the period beginning nine(9) months before a Change in Control (as defined below).

 

B.                                     For the purpose of this Agreement, a “Changeof Control” shall mean any of the following events:

 

(i)                                     The acquisition byany person, entity or “group” required to file a Schedule 13D or Schedule 14D-1promulgated under the Securities Exchange Act of 1934, as amended (the“Exchange Act”) (excluding, for this purpose, any of the following thatacquires beneficial ownership of voting securities of the Corporation,including shares acquired pursuant to the exercise of options or warrants, orconversion of preferred stock outstanding as of the date hereof: (a) CLFinancial, Ltd., Angostura Ltd., or any of their affiliates; (b) theCorporation, its affiliates or subsidiaries; (d) V&S Vin & Spirit AB,its affiliates or subsidiaries, solely in connection with a transaction withthe Corporation, its affiliates or subsidiaries approved by the Board ofDirectors; or (d) any employee benefit plan of the Corporation, or itsaffiliates or subsidiaries), of beneficial ownership (within the meaning ofRule 13d-3 promulgated under the Exchange Act) of over 40% (in one or moretransactions, in the aggregate) of either the then outstanding shares of commonstock or the combined voting power of the Corporation’s then outstanding votingsecurities entitled to vote generally in the election of directors; or

 

(ii)                                  An election orappointment to the Board of Directors by virtue of which the individuals whoimmediately prior thereto constituted the Board of Directors (the “IncumbentBoard”) no longer constitute at least a majority of the Board of Directors(other than an election or appointment of a director or directors precipitatedby CL Financial, Ltd., Angostura Ltd., V&S Vin & Spirit AB, or any oftheir affiliates, or by the

 

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Board of Directors if at that time at least amajority are individuals who are directors on the date hereof), provided thatany person who becomes a director subsequent to the date hereof whose election,or nomination for election by the Corporation’s stockholders, was approved by avote of at least a majority of the Incumbent Board (other than an election ornomination of an individual whose initial assumption of office is in connectionwith an actual or threatened election contest relating to the election of theDirectors of Employer, as such terms are used in Rule 14a-1 promulgated underthe Exchange Act) shall be, for purposes of this Agreement, considered asthough such person were a member of the Incumbent Board; or

 

(iii)                               Approval by thestockholders of the Corporation of: (a) a reorganization, merger orconsolidation by reason of which persons who were the stockholders of theCorporation immediately prior to such reorganization, merger or consolidationdo not, immediately thereafter, own more than fifty percent (50%) of thecombined voting power entitled to vote generally in the election of directorsof the reorganized, merged or consolidated company’s then outstanding votingsecurities; or (b) a liquidation or dissolution of the Corporation or the saleof all or substantially all of the assets of the Corporation, whether suchassets are held directly or indirectly (excluding the currently proposed jointventures with affiliates of CL Financial, Ltd. and/or V&S Vin & SpiritAB, if such transactions constitute a sale of substantially all of the assetsof Employer).

 

C.                                     The definition of “for cause” terminationshall be the same as set forth in the employment agreement between theExecutive and the Corporation in effect as of the date of this Agreement.  In the event there is no employmentagreement between the Executive and the Corporation on the date of thisAgreement, “cause” for termination shall mean that (a) the Executive is convicted of afelony which, in the sole determination of the Board of Directors, would have amaterial adverse effect on Executive’s ability to perform his duties hereunderor on the business or reputation of the Corporation; (b) the Executive hasexhibited gross misconduct resulting in material harm to the Corporation, itsbusiness or reputation; (c) the Executive has willfully misappropriated theCorporation’s assets or has otherwise willfully defrauded the Corporation,including without limitation by fraud, theft, embezzlement, or breach of afiduciary duty involving personal profit.  For purposes of this paragraph, no act or failure to act on theExecutive’s part shall be considered “willful” unless done, or omitted to bedone, by him not in good faith and without reasonable belief that his action oromission was in the best interests of the Corporation.

 

**11.****                              ****Named Fiduciary**. The Corporation is hereby designated the “Named Fiduciary” as such termis defined in ERISA.  As NamedFiduciary, the Corporation shall be responsible for the management andadministration of the terms of this Agreement. The Corporation’s Board ofDirectors may delegate to others the management and operating responsibilitiesof the plan including the employment of advisors and may exercise any otherpowers necessary for the discharge of its duties to the extent not in conflictwith the provisions of ERISA.

 

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**12.****                              ****Claims Procedure**.

 

A.                                   If the Executive or his beneficiary believesthat he is being denied a benefit to which he is entitled under this Agreement(hereinafter referred to as a “Claimant”), such Claimant may file a writtenrequest for such benefit with the Corporation setting forth his claim.  The request must be addressed to thePresident of the Corporation at its then principal place of business.

 

B.                                     The Corporation shall reply to theClaimant’s claim within ninety (90) days of receiving the claim.  If the claim is denied in whole or in part,the Corporation shall adopt a written opinion, using language calculated to beunderstood by the Claimant, setting forth:

 

(i)                                     The specific reason or reasons for suchdenial;

 

(ii)                                  The specific reference to pertinentprovisions of this Agreement on which such denial is based;

 

(iii)                               A description of any additional material orinformation necessary for the Claimant to perfect his claim and an explanationwhy such material or such information is necessary;

 

(iv)                              Appropriate information as to the steps tobe taken if the Claimant wishes to submit the claim for review; and

 

(v)                                 The time limits for requesting a reviewunder subparagraph C. and for review under subparagraph D. hereof.

 

C.                                     Within sixty (60) days after the receipt bythe Claimant of the written opinion described above, the Claimant may requestin writing that the Secretary of the Corporation review the determination ofthe Corporation. Such request must be addressed to the Secretary of theCorporation, at the Corporation’s then principal place of business. TheClaimant or his duly authorized representative may, but need not, review thepertinent documents and submit issues and comments in writing for considerationby the Corporation. If the Claimant does not request a review of theCorporation’s determination by the Secretary of the Corporation within suchsixty (60) day period, he shall be barred and estopped from challenging theCorporation’s determination.

 

D.                                    Within sixty (60) days after the Secretary’sreceipt of a request for review, he will review the Corporation’sdetermination. After considering all materials presented by the Claimant, theSecretary will render a written opinion, written in a manner calculated to beunderstood by the Claimant, setting forth the specific reasons for the decisionand containing specific references to the pertinent provisions of thisAgreement on which the decision is based. If special circumstances require thatthe sixty (60) day time period be extended, the Secretary will so notify theClaimant and will render the decision as soon as possible, but no later thanone hundred twenty (120) days after receipt of the request for review.

 

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**13.****                              ****Non-Assignability ofBenefits**.  The Executive may not transfer, assign,anticipate, hypothecate or otherwise encumber any part or all of the amountspayable hereunder, which are expressly declared to be unassignable andnon-transferable. Any such attempted assignment or transfer shall be void andshall terminate this Agreement; the Corporation shall thereupon have no furtherliability hereunder. No amount payable hereunder shall, prior to actual paymentthereof, be subject to seizure by any creditor of the Executive for the paymentof any debt, judgment or other obligation, by a proceeding at law or in equity.

 

**14.****                              ****Amendment**. This Agreement may be amended at any time and from time to time, by awritten instrument signed by the Corporation and the Executive.

 

**15.****                              ****Binding Effect**. All of the terms and provisions of this Agreement shall be binding upon,inure to the benefit of, and be enforceable by the parties and their respectiveadministrators, personal representatives, legal representatives, heirs,successors and permitted assigns, whether so expressed or not.

 

**16.****                              ****Notices**. Any notice, consent or demand required or permitted to be given underthe provisions of this Agreement shall be in writing, and shall be signed bythe party giving or making the same.  Ifsuch notice, consent or demand is mailed to a party hereto, it shall be sent byUnited States certified mail, postage prepaid, addressed to such party’s lastknown address as shown on the records of the Corporation. The date of suchmailing shall be deemed the date of notice, consent or demand.

 

**17.****                              ****Governing Law**. This Agreement and all transactions contemplated by this Agreement shallbe governed by, and construed and enforced in accordance with, the internallaws of the State of Florida without regard to principles of conflicts of laws.

 

**18.****                              ****Jurisdiction and Venue**. The parties acknowledge that a substantial portion of the negotiations,anticipated performance and execution of this Agreement occurred or shall occurin Palm Beach County, Florida.  Anycivil action or legal proceeding arising out of or relating to this Agreementshall be brought in the courts of record of the State of Florida in Palm BeachCounty or the United States District Court, Southern District of Florida.  Each party consents to the jurisdiction ofsuch Florida court in any such civil action or legal proceeding and waives anyobjection to the laying of venue of any such civil action or legal proceedingin such Florida court.  Service of anycourt paper may be effected on such party by mail, as provided in thisAgreement, or in such other manner as may be provided under applicable laws,rules of procedure or local rules.

 

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**N WITNESS WHEREOF**, the parties hereto have set their hands onthe day and year first hereinabove written.

 

 
| **TODHUNTER INTERNATIONAL, INC.** |
|-----------------------------------|
|                              |   |
| By:                               | /s/  Jay S. Maltby | ,  Chairman, CEO & President |
|                              |   |
|                              |   |
| **EXECUTIVE:**                    |
|                              |   |
| By:                               | /s/  Thomas A. Valdes | ,  Executive Vice President - Todhunter International, Inc. |
|                              |   | President  – Cruzan Ltd. |
|                                   |  |  |  |  |

 

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