Exhibit
10.38


 


TODHUNTER INTERNATIONAL,
INC.


222 Lakeview Avenue, Suite
1500


West Palm Beach, FL 33401


 


ENDORSEMENT SPLIT-DOLLAR
AGREEMENT


 


THIS
ENDORSEMENT SPLIT-DOLLAR AGREEMENT (this “Agreement”) is entered into this 20th day of February 2004,
by and between Todhunter International, Inc., a Delaware corporation (the
“Corporation”) and Jay S. Maltby (the “Executive”).


 


WITNESSETH:


 


WHEREAS, the Executive is employed by the
Corporation; and


 


WHEREAS, the Corporation recognizes the valuable
services performed by the Executive and wishes to encourage his continued
employment; and


 


WHEREAS, the Corporation is desirous of providing
protection for the beneficiaries of Executive in the event of his untimely
death; and


 


WHEREAS, The Corporation has applied for, and is
the owner of Life Insurance Policy Number 10034387 (the “Policy”) in the
specified face amount of $1,500,000 from the Lincoln National
Life Insurance Company (the “Insurer”); and


 


WHEREAS, it is understood and agreed that this
Agreement is to be considered effective as of the date on which the Policy was
issued by the Insurer or the date of execution of this Agreement whichever is
later.


 


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


 


1.             Ownership Rights In The Policy.


 


A.            The Corporation shall have all of the ownership rights,
options and privileges permitted by the Policy except those expressly granted
to the Executive by the terms of this Agreement.


 


B.            The Corporation has the right to borrow or to pledge the
cash surrender value of the Policy to the extent of its interest specified in
Paragraph 1.C., and as permitted by the terms of the Policy. The Corporation’s
interest in the cash surrender value of the Policy at any time during the
Executive’s lifetime, or at death, shall be adjusted to reflect any
indebtedness on or secured by the Policy which is attributable to borrowing by
or on behalf of the Corporation (including any interest due on such
indebtedness).


 


C.            The Corporation shall have the right to designate itself
as beneficiary of the Policy, to the extent of the difference between the total
death benefit paid under the life insurance contract and the amount designated
in Paragraph 1.D., below, provided such amount is reduced by any indebtedness
(on or secured by the Policy) which is attributable to borrowing by or on
behalf of the Corporation (including any interest due on such indebtedness)
and/or any withdrawals by or on behalf of the Corporation.


 

















 


D.            The Corporation hereby endorses to the Executive policy
death benefits in the amount of $1,500,000 which shall be payable to
the Executive’s estate if the Executive dies while this Agreement is in
force.  The Corporation and the
Executive’s estate may select a settlement option as provided in the Policy at
the time of distribution.


 


E.             The Corporation may not take any action with respect to
the Policy that will impair any right or interest of the Executive in the
Policy.


 


2.             Premium Payments.  On or before the due date of each Policy premium, or
within the grace period provided therein, the Corporation shall pay the full
amount to the Insurer.


 


3.             Division of Death Proceeds of Policy.  In the event that the Executive shall die
while this Agreement is in force, the Corporation shall be entitled to receive
from the Policy proceeds an amount equal to the Corporation’s interest in the
Policy, as determined under Paragraph 1.C. of this Agreement. The portion of
the Policy proceeds which is in excess of the amount paid to the Corporation
shall be paid to the Executive’s estate in accordance with the terms of the
Policy and Paragraph 1.D. of this Agreement.


 


4.             Waiver of Premium.  Upon the unanimous agreement of the
Corporation and the Executive, the Corporation shall apply to the Insurer for a
supplemental agreement providing for the waiver of policy premiums in the event
of the Executive’s disability. The Corporation shall pay any additional premium
attributable to such an agreement.


 


5.             Choice of Dividend Options.  To the extent the Insurer declares dividends
on the Policy, the Corporation shall have the right to choose the option or
combination of options it desires from among those offered by the Insurer. The
Corporation shall notify the Insurer of its choice.


 


6.             Termination of Agreement.


 


A.            This Agreement shall be cancelled and shall terminate
upon the termination of the Executive’s employment with the Corporation for any
reason other than the Executive’s disability as defined in Paragraph 3 of the
Salary Continuation Plan Agreement between the Corporation and the Executive
dated February
20, 2004 (the “Salary Continuation Plan Agreement”).   Upon such termination, the Executive shall
have a 60-day option to pay the Corporation an amount equal to the
Corporation’s interest in the Policy under Paragraph 1.C. in return for the
Corporation’s release of any claim to the policy. If, within the 60-day period
following the cancellation of this Agreement, the Executive fails to exercise
said option, then the Executive shall be deemed to have relinquished all rights
in the Policy and the Corporation will be free to surrender or take any other
action with respect to the Policy as it may desire. If the Executive fails to
pay the Corporation within the 60-day option period, the Executive agrees upon
request of the Corporation to execute any and all instruments that may be
required to transfer all right, title, and interest in the Policy to the
Corporation.


 


B.            Notwithstanding Paragraph 6.A., in the event the
Executive dies during his employment with the Corporation, this Agreement shall
be cancelled and shall terminate upon the payment of the death proceeds of the
Policy to the Executive’s estate in accordance with Paragraph 1.D. and
Paragraph 3 of this Agreement.


 


2

















 


7.             Termination of this Agreement in Connection
with a Change in Control.


 


A.            Notwithstanding anything in this Agreement to the
contrary, unless the Executive is terminated “for cause,” as defined in
Paragraph 10.C. of this Agreement, the Corporation may not terminate this
Agreement without the consent of the Executive during the period beginning nine
(9) months before a Change in Control (as defined below); provided however,
this Agreement shall be cancelled and shall terminate once the Executive become
entitled to receive payment of the retirement benefit in accordance with
Paragraph 1 of the Salary Continuation Plan Agreement.


 


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


 


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


 


(ii)           An election or
appointment to the Board of Directors by virtue of which the individuals who
immediately prior thereto constituted the Board of Directors (the “Incumbent
Board”) no longer constitute at least a majority of the Board of Directors
(other than an election or appointment of a director or directors precipitated
by CL Financial, Ltd., Angostura Ltd., V&S Vin & Spirit AB, or any of
their affiliates, or by the Board of Directors if at that time at least a
majority are individuals who are directors on the date hereof), provided that
any person who becomes a director subsequent to the date hereof whose election,
or nomination for election by the Corporation’s stockholders, was approved by a
vote of at least a majority of the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
Directors of Employer, as such terms are used in Rule 14a-1 promulgated under
the Exchange Act) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or


 


(iii)          Approval by the stockholders of the
Corporation of: (a) a reorganization, merger or consolidation by reason of
which persons who were the stockholders of the Corporation immediately prior to
such reorganization, merger or consolidation do not, immediately thereafter,
own more than fifty percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated company’s then outstanding voting securities; or (b) a liquidation
or dissolution of the Corporation or the sale of all or substantially all of
the assets of the Corporation, whether such assets are held directly or
indirectly (excluding the currently proposed joint ventures with affiliates of
CL Financial, Ltd. and/or V&S Vin & Spirit AB, if such transactions
constitute a sale of substantially all of the assets of Employer).


 


3

















 


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


 


8.             Amendment.  This Agreement may be amended at any time
and from time to time, by a written instrument signed by the Corporation and
the Executive.


 


9.             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 respective administrators, personal representatives,
legal representatives, heirs, successors and permitted assigns, whether so
expressed or not.


 


10.          Notices.  Any notice, consent or demand required or
permitted to be given under the provisions of this Agreement shall be in
writing, and shall be signed by the party giving or making the same.  If such notice, consent or demand is mailed
to a party hereto, it shall be sent by United States certified mail, postage
prepaid, addressed to such party’s last known address as shown on the records
of the Corporation. The date of such mailing shall be deemed the date of
notice, consent or demand.


 


11.          Insurer Not a Party to Agreement.  The Insurer shall not be deemed a party to
this Agreement. Payment or other performance of its contractual obligations in
accordance with the Policy provisions shall fully discharge the Insurer from
any and all liability.


 


12.          Named Fiduciary.  The Corporation is hereby designated the
“Named Fiduciary” as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”). 
As Named Fiduciary, the Corporation shall be responsible for the
management and administration of the terms of this Agreement. The Corporation’s
Board of Directors may delegate to others the management and operating
responsibilities of the plan including the employment of advisors and may
exercise any other powers necessary for the discharge of its duties to the
extent not in conflict with the provisions of ERISA.


 


4

















 


13.          Claim Procedure.


 


A.            If the Executive or his personal representative believes
that 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 written request
for such benefit with the Corporation setting forth his claim.  The request must be addressed to the
President of the Corporation at its then principal place of business.


 


B.            The Corporation shall reply to the Claimant’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 be understood by the
Claimant, setting forth:


 


(i)            The specific reason or reasons for such denial;


 


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


 


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


 


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


 


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


 


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


 


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


 


14.          Governing Law.  This Agreement and all transactions
contemplated by this Agreement shall be governed by, and construed and enforced
in accordance with, the internal laws of the State of Florida without regard to
principles of conflicts of laws.


 


5

















 


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


 


IN WITNESS
WHEREOF, the parties
hereto have set their hands on the day and year first hereinabove written.


 


	
  TODHUNTER
  INTERNATIONAL, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ezra Shashoua

  	
  , Executive Vice President & CFO

  
	
   

  	
   

  
	
  EXECUTIVE

  
	
   

  
	
  By:

  	
  /s/ Jay S. Maltby

  	
  , Chairman and CEO

  
					



 


6