Exhibit 10.39


 


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 Thomas A. Valdes (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 10034391 (the “Policy”) in the
specified face amount of $1,000,000 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 $1,000,000 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.


 


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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).


 


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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.


 


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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.


 


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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/ Jay S. Maltby

  	
  , Chairman & CEO

  



 


EXECUTIVE


 


	
  By:

  	
  /s/ Thomas A. Valdes

  	
  , Executive Vice
  President Todhunter International, Inc. and

  
	
   

  	
   

  	
  President Cruzan Ltd.

  
				



 


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