Exhibit 10.2

 

CHANGE IN CONTROL AGREEMENT

 

THIS CHANGE IN CONTROL AGREEMENT (this “Agreement”) is entered into effective as
of            by and between DEAN FOODS COMPANY, a Delaware corporation
(together with its subsidiaries, the “Company”), and                (the
“Executive”).

 

RECITALS

 

A.            The Board of Directors of the Company (the “Board”) has determined
that the interests of the Company would be advanced by providing the key
executives of the Company with certain benefits in the event of the termination
of employment of any such executive in connection with or following a Change in
Control (as hereafter defined).

 

B.            The Board believes that such benefits enable the Company to
continue to attract and retain competent and qualified executives, assure
continuity and cooperation of management and encourage such executives to
diligently perform their duties without personal financial concerns, thereby
enhancing shareholder value and ensuring a smooth transition.

 

AGREEMENTS

 

NOW, THEREFORE, for good and valuable consideration, including the mutual
covenants set forth herein, the parties hereto agree as follows:

 

1.             Definitions.          The following terms shall have the
following meanings for purposes of this Agreement.

 

“Affiliate” means any entity controlled by, controlling or under common control
with, a person or entity.

 

“Annual Pay” means the sum of (i) an amount equal to the annual base salary rate
payable to the Executive by the Company at the time of termination of his or her
employment plus (ii) an amount equal to the target bonus established for the
Executive for the Company’s fiscal year in which his or her termination of
employment occurs, but in either case, without giving effect to any reduction
therein occurring following a Change in Control.

 

“Cause” means the Executive’s (i) willful and intentional material breach of
this Agreement, (ii) willful and intentional misconduct or gross negligence in
the performance of, or willful neglect of, the Executive’s duties, which has
caused material injury (monetary or otherwise) to the Company, or
(iii) conviction of, or plea of nolo contendere to, a felony; provided, however,
that no act or omission shall constitute “Cause” for purposes of this Agreement
unless the Board or the Chairman of the Board provides to the Executive
(a) written notice clearly and fully describing the particular acts or omissions
which the Board or the Chairman of the Board reasonably believes in good faith
constitutes “Cause” and (b) an

 

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

 

opportunity, within 30 days following his or her receipt of such notice, to meet
in person with the Board or the Chairman of the Board to explain or defend the
alleged acts or omissions relied upon by the Board and, to the extent
practicable, to cure such acts or omissions.  Further, no act or omission shall
be considered as “willful” or “intentional” if the Executive reasonably believed
such acts or omissions were in the best interests of the Company.

 

“Change in Control” means (1) any “person” (as such term is used in
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), but specifically excluding the Company, any wholly-owned subsidiary of
the Company and/or any employee benefit plan maintained by the Company or any
wholly-owned subsidiary of the Company) becomes the “beneficial owner” (as
determined pursuant to Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company’s then outstanding securities;
or (2) individuals who currently serve on the Board, or whose election to the
Board or nomination for election to the Board was approved by a vote of at least
two-thirds (2/3) of the directors who either currently serve on the Board, or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority of the Board; or (3) the Company or any
subsidiary of the Company shall merge with or consolidate into any other
corporation, other than a merger or consolidation which would result in the
holders of the voting securities of the Company outstanding immediately prior
thereto holding immediately thereafter securities representing more than sixty
percent (60%) of the combined voting power of the voting securities of the
Company or such surviving entity (or its ultimate parent, if applicable)
outstanding immediately after such merger or consolidation; or (4) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets, or such a plan is commenced.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Confidential Information” means all information, whether oral or written,
previously or hereafter developed, acquired or used by the Company or its
subsidiaries and relating to the business of the Company and its subsidiaries
that is not generally known to others in the Company’s area of business,
including without limitation trade secrets, methods or practices developed by
the Company or any of its subsidiaries, financial results or plans, customer or
client lists, personnel information, information relating to negotiations with
clients or prospective clients, proprietary software, databases, programming or
data transmission methods, or copyrighted materials (including without
limitation, brochures, layouts, letters, art work, copy, photographs or
illustrations).  It is expressly understood that the foregoing list shall be
illustrative only and is not intended to be an exclusive or exhaustive list of
“Confidential Information.”

 

“Good Reason” means any of the following events occurring, without the
Executive’s prior written consent specifically referring to this Agreement,
within two (2) years following a Change in Control:

 

(1)           (A) Any material reduction in the amount of the Executive’s Annual
Pay, (B) any material reduction in the amount of Executive’s other incentive
compensation

 

2

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

 

opportunities, or (C) any material reduction in the aggregate value of the
Executive’s benefits as in effect from time to time (unless in the case of
either B or C, such reduction is pursuant to a general change in compensation or
benefits applicable to all similarly situated employees of the Company and its
Affiliates);

 

(2)           (A) the removal of the Executive from the Executive’s position
held by him or her immediately prior to the Change in Control, or (B) any other
significant reduction in the nature or status of the Executive’s duties or
responsibilities;

 

(3)           transfer of the Executive’s principal place of employment to a
metropolitan area other than that of the Executive’s place of employment
immediately prior to the Change in Control; or

 

(4)           failure by the Company to obtain the assumption agreement referred
to in Section 7 of this Agreement prior to the effectiveness of any succession
referred to therein, unless the purchaser, successor or assignee referred to
therein is bound to perform this Agreement by operation of law.

 

In order for a termination by the Executive to constitute a termination for Good
Reason, (i) the Executive must notify the Company of the circumstances claimed
to constitute Good Reason in writing not later than the 90th day after it has
arisen or occurred, (ii) the Company must not have cured such circumstances
within 30 days of receipt of the notice and (iii) the Executive must actually
terminate employment on or before the 24th month anniversary of the Change in
Control.

 

“Termination Pay” means a payment made by the Company to the Executive pursuant
to Section 2(a) (ii).

 

2.             Change in Control Termination Payment and Benefits.

 

(a)           Involuntary or Constructive Termination.  In the event that the
Executive’s employment with the Company or its successor is terminated by the
Company or its successor without Cause or by the Executive for Good Reason in
connection with or within two (2) years after a Change in Control, the Executive
shall be entitled to the following payments and other benefits:

 

(i)            The Company shall pay to the Executive a cash payment in an
amount equal to the sum of (A) the Executive’s accrued and unpaid salary as of
his or her date of termination of employment, plus (B) his or her accrued and
unpaid bonus, if any, for the Company’s prior fiscal year, plus (C) an amount
equal to the greater of the following, paid on a pro rata basis for the portion
of the year between January 1 and the date of the Executive’s termination of
employment: (x) Executive’s target bonus for the year of termination, or (y) the
actual bonus to which the Executive would be entitled in the year of
termination, if calculable at the date of termination, plus (D) reimbursement
for all unreimbursed expenses reasonably and necessarily incurred by the
Executive (in accordance with Company policy) in connection with

 

3

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

 

the business of the Company prior to termination and since the beginning of the
calendar year prior to the date of termination.  This amount shall be paid
within five (5) business days of the date of the Executive’s termination of
employment.

 

(ii)           The Company shall pay to the Executive a cash payment in an
amount equal to two (2) times the Executive’s Annual Pay.  This amount shall be
paid by the Company in accordance with Section 2(d) hereof.

 

(iii)          The Company shall pay to the Executive a cash payment in an
amount equal to the sum of (A) the Executive’s unvested account balance under
the Company’s 401(k) plan, if any, and (B) two (2) times the amount of the
aggregate matching contributions payable in respect of Executive’s contributions
into the Executive’s 401(k) account for the last completed calendar year (which,
for this purpose, shall be annualized if the Executive was not eligible to
participate in such 401(k) plan for the entire calendar year).  This amount
shall be paid within 60 days after the date of the Executive’s termination of
employment.

 

(iv)          The Executive and his or her eligible dependents shall be entitled
for a period of two (2) years following his or her date of termination of
employment to continued coverage, on the same basis as similarly situated active
employees, under the Company’s group health, dental, long-term disability and
life insurance plans as in effect from time to time (but not any other welfare
benefit plans or any retirement plans); provided that coverage under any
particular benefit plan shall expire with respect to the period after the
Executive becomes covered under another employer’s plan providing for a similar
type of benefit.  In the event the Company is unable to provide such coverage on
account of any limitations under the terms of any applicable contract with an
insurance carrier or third party administrator, the Company shall pay the
Executive an amount equal to the cost to the Company of providing such coverage
within 60 days after the date of the Executive’s termination of employment.  To
the extent that Company’s group health or dental benefits are self-insured, then
in addition to any other limitation provided here, the period of coverage
provided by this Section 2(a) (iv) under the self-insured health or dental plan
shall not exceed the period of time during which the Executive would be entitled
to receive continuation coverage under a group health plan under section 4980B
(COBRA) if the Executive had elected such coverage and paid such premiums.  To
the extent that the immediately preceding sentence applies, the Company shall
pay the Executive an amount equal to the cost of such COBRA coverage for a
period equal to the excess of (i) 24 months minus (ii) the number of months of
COBRA coverage initially available to the Executive, as determined in good faith
by the Company, with such payment to be made within 60 days after the date of
the Executive’s termination of employment.

 

(v)           The Company shall pay all costs and expenses, up to a maximum of
$25,000, related to outplacement services for the Executive, the provider of
which shall be selected by the Executive in his or her sole discretion.  This
amount shall be paid directly to the provider of such services but only with
respect to services rendered prior to the last day of the second calendar year
following the calendar year in which the Executive’s termination date occurs. 
The Company shall pay such expenses within 90 days of the date of receipt of an
invoice

 

4

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

 

for such services, but in no event later than the end of the third calendar year
following the calendar year in which the Executive’s termination date occurs.

 

(b)           Accelerated Vesting.  In the event that the Executive’s employment
with the Company or its successor is terminated by the Company or its successor
without Cause or by the Executive for Good Reason in connection with or within
two (2) years after a Change in Control, all of the Executive’s unvested awards
under the Company’s stock award plans shall automatically and immediately vest
in full.

 

(c)           No Duplication; Other Severance Pay.  There shall be no
duplication of severance pay in any manner.  In this regard, the Executive shall
not be entitled to Termination Pay hereunder for more than one position with the
Company and its Affiliates. If the Executive is entitled to any notice or
payment in lieu of any notice of termination of employment required by Federal,
state or local law, including but not limited to the Worker Adjustment and
Retraining Notification Act, the severance compensation to which the Executive
would otherwise be entitled under this Agreement shall be reduced by the amount
of any such payment in lieu of notice.  If Executive is entitled to any
severance or termination payments (but excluding retirement and similar
benefits) under any employment or other agreement (other than any stock award or
stock option agreements) with the Company or any of its Affiliates, the
severance compensation payable under any such plan, program, arrangement or
agreement shall be deemed to satisfy, to the extent of such payment, the
obligations to the Executive in respect of Termination Pay.  Except as set forth
in the immediately preceding sentence, the foregoing payments and benefits shall
be in addition to and not in lieu of any payments or benefits to which the
Executive and his or her dependents may otherwise be entitled to under the
Company’s compensation and employee benefit plans.  Subject to subparagraph
1(c) of the definition of Good Reason, nothing herein shall be deemed to
restrict the right of the Company from amending or terminating any such plan in
a manner generally applicable to similarly situated active employees of the
Company and its Affiliates, in which event the Executive shall be entitled to
participate on the same basis (including payment of applicable contributions) as
similarly situated active executives of the Company and its Affiliates.

 

(d)           Mutual Release.  Termination Pay shall be conditioned upon the
execution by the Executive within 60 days after the Executive’s termination of
employment of a valid release prepared by the Company pursuant to which the
Executive shall release the Company, to the maximum extent permitted by law,
from any and all claims the Executive may have against the Company that relate
to or arise out of the employment or termination of employment of the Executive,
except such claims arising under this Agreement, any employee benefit plan, or
any other written plan or agreement (a “Release”).  The full amount of
Termination Pay shall be paid in a lump sum in cash to the Executive within ten
(10) days following receipt by the Company of a properly executed Release
(which, if revocable, has not been revoked) by the Executive.  In addition, if
the Executive shall timely deliver (and shall not have revoked) the Release, the
Company shall simultaneously with the payment of Termination Pay execute a
release of all claims it may have against the Executive arising out of the
Executive’s employment, other than claims arising under this Agreement or
otherwise relating to covenants and obligations of the Executive intended to
continue following the Executive’s termination of employment.

 

5

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

 

3.             Excise Taxes.  Notwithstanding anything to the contrary contained
in this Agreement, if the Company reasonably determines that the termination
benefits payable to the Executive pursuant to this Agreement or any other
agreement or arrangement between the Company and the Executive would constitute
a “parachute payment” within the meaning of Section 280G of the Code and subject
the Executive to an excise tax under Section 4999 of the Code, then the amount
of the termination benefits payable hereunder shall be limited such that the
Executive’s net payment received on an after-tax basis is $1 less than the
amount at which the payment would be subject to the excise tax under
Section 4999 of the Code.  Any reduction in the amount of the termination
benefits payable hereunder shall be debited, in order, from the amounts payable
under Section 2(a)(ii), then 2(a)(iii) and then 2(a)(iv).

 

4.             Certain Covenants by the Executive.

 

(a)           Delivery of Confidential Information to Executive.  Executive
acknowledges that (i) the Company is engaged in a continuous program of
research, development and production respecting its business (the foregoing,
together with any other businesses in which the Company engages from the date
hereof to the date of the termination of Executive’s employment with the Company
and its Subsidiaries as the “Company Business”); (ii) Executive’s work for and
position with the Company and/or one of its Subsidiaries has allowed Executive,
and will continue to allow Executive, access to trade secrets of, and
Confidential Information concerning, the Company; and (iii) the agreements and
covenants contained in this Agreement are necessary and essential to protect the
business, goodwill, and customer relationships that Company and its Subsidiaries
have expended significant resources to develop.  Each of the parties hereby
agrees and acknowledges that, on or following the date hereof, the Company has
provided, or will provide, and the Executive has received, or will receive, one
or more of the following: authorization to (x) access Confidential Information
through a new computer password or by other means, (y) represent the Company in
communications with customers and other third parties to promote the goodwill of
the business in accordance with generally applicable Company policies or
(z) access to participate in certain restricted access meetings, conferences or
training relating to Executive’s position with the Company.  Executive
understands and agrees that if Confidential Information were used in competition
against the Company, the Company would experience serious harm and the
competitor would have a unique advantage against the Company.

 

(b)           Covenant Not to Compete or Solicit.  In consideration of the
payments to be made to the Executive pursuant to this Agreement and in
consideration of the delivery of Confidential Information by the Company as
described and in this Section 4, the Executive hereby agrees that, during the
term of his or her employment with the Company or any of its Affiliates and for
a period of two (2) years thereafter, he or she will not, directly or
indirectly, individually or on behalf of any person or entity other than the
Company or any of its Affiliates:

 

(i)            Become associated with (as defined below) any company or business
(other than the Company or any Affiliate of the Company) engaged primarily in
the manufacture,

 

6

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

 

distribution, sale or marketing of any of the Relevant Products (as defined
below) in any geographical area in which the Company or any of its Affiliates
operates;

 

(ii)           Approach, consult, solicit business from, or contact or otherwise
communicate, directly or indirectly, in any way with any Customer (as defined
below) in an attempt to (1) divert business from, or interfere with any business
relationship of the Company or any of its Affiliates, or (2) convince any
Customer to change or alter any of such Customer’s existing or prospective
contractual terms and conditions with the Company or any of its Affiliates; or

 

(iii)          Solicit, induce, recruit or encourage, either directly or
indirectly, any employee of the Company or any of its Affiliates to leave his or
her employment with the Company or any of its Affiliates, or employ or offer to
employ any employee of the Company or any of its Affiliates.  For the purposes
of this section, an employee of the Company or any of its Affiliates shall be
deemed to be an employee of the Company or any such Affiliate while employed by
the Company or such Affiliate and for a period of 60 days thereafter.

 

For purposes of this Agreement, the following terms shall have the meanings
indicated:

 

“associated with” means to become involved or act as an owner, partner,
stockholder, investor, joint venturer, lender, director, manager, officer,
employee, consultant, independent contractor, representative or agent.

 

“Customer” means all persons or entities who purchased any Relevant Product from
the Company or any of its Affiliates during the term of the Executive’s
employment with the Company or any such Affiliate.

 

“Relevant Product(s)” means (i) milk and milk-based beverages, (ii) creams and
creamers, (iii) ice cream and ice cream novelties, (iv) ice cream mix, and
(v) cultured dairy products.

 

Notwithstanding the foregoing, the Executive is not prohibited from owning,
either of record or beneficially, not more than five percent (5%) of the shares
or other equity of any publicly traded company.  The provisions of this
Section 4(a) are not intended to override, supercede, reduce, modify or affect
in any manner any other non-competition or non-solicitation agreement between
the Executive and the Company or any of its Affiliates.  Any such covenant or
agreement shall remain in full force and effect in accordance with its terms. 
The Company will be entitled to injunctive and other relief to prevent or enjoin
any violation of the provisions of this Agreement.

 

(c)           Protection of Confidential Information. The Executive agrees that
he or she will not at any time during or following his or her employment by the
Company, without the Company’s prior written consent, divulge any Confidential
Information to any other person or entity or use any Confidential Information
for his or her own benefit.  Upon termination of employment, for any reason
whatsoever, regardless of whether either party may be at fault, the

 

7

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

 

Executive will return to the Company all physical Confidential Information in
the Executive’s possession.

 

(d)           Nondisclosure of Agreement.   The Executive agrees, at all times
during his or her employment by the Company, not to disclose or discuss in any
manner (whether to individuals inside or outside the Company), the existence or
terms of, this Agreement without the prior written consent of the Company,
except to the extent required by law.

 

(e)           Nondisparagement.  The Executive and the Company agree that, for
so long as the Executive remains employed by the Company, and for a period of
two (2) years following the termination of the Executive’s employment, neither
the Executive nor the Company will make or authorize any public statement,
whether orally or in writing, that disparages the other party hereto with
respect to such other party’s business interests or practices; provided, that
neither party shall be restricted in connection with statements made in context
of any litigation, arbitration or similar proceeding involving the other party
hereto.

 

(f)            Extent of Restrictions.  The Executive acknowledges that he or
she has given careful consideration to the restraints imposed by this Section 4
and he or she fully agrees that the restrictions contained in this Section 4
correctly set forth the understanding of the parties at the time this Agreement
is entered into, are reasonable and necessary to protect the legitimate
interests of the Company, and that any violation will cause substantial injury
to the Company.  In the event of any such violation, the Company shall be
entitled, in addition to any other remedy, to preliminary or permanent
injunctive relief.  If any court having jurisdiction shall find that any part of
the restrictions set forth in this Agreement are unreasonable in any respect, it
is the intent of the parties that the restrictions set forth herein shall not be
terminated, but that this Agreement shall remain in full force and effect to the
extent (as to time periods and other relevant factors) that the court shall find
reasonable.

 

5.             Tax Withholding.  All payments to the Executive under this
Agreement will be subject to the withholding of all applicable employment and
income taxes.

 

6.             Severability.  In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.

 

7.             Successors.  This Agreement shall be binding upon and inure to
the benefit of the Company and any successor of the Company.  The Company will
require any successor to all or substantially all of the business and/or assets
of the Company to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
if no succession had taken place.

 

8.             Entire Agreement.  By executing this Agreement, the Executive
agrees that any and all agreements executed between the Company (or any
subsidiary of the Company or any predecessor of the Company or any subsidiary)
and the Executive prior to the date hereof regarding benefits resulting from a
Change in Control are hereby nullified and cancelled in their entirety, and this
Agreement shall substitute for and fully replace any such prior agreements.

 

8

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

 

This Agreement shall constitute the entire agreement between the parties hereto
with respect to the subject matter hereof.  This Agreement may not be modified
in any manner except by a written instrument signed by both the Company and the
Executive.

 

9.             Termination of Employment.  For all purposes under this
Agreement, the Executive shall not have a “termination of employment” (and
corollary terms) from the Company unless and until the Executive has a
“separation from service” (as determined under Treas. Reg. Section 1.409A-1(h),
as uniformly applied in accordance with such rules as shall be established by
the Company) from time to time by the Company.

 

10.          Notices.  Any notice required under this Agreement shall be in
writing and shall be delivered by certified mail return receipt requested to
each of the parties as follows:

 

To the Executive:

 

To the Company:

 

DEAN FOODS COMPANY

2711 N. Haskell Ave., Suite 3400

Dallas, Texas 75204

Attn.:  General Counsel

Tel.: 214-303-3400

Fax: 214-303-3499

 

11.          Governing Law.  The provisions of this Agreement shall be construed
in accordance of the laws of the State of Delaware, except to the extent
preempted by ERISA or other federal laws, as applicable, without reference to
the conflicts of laws provisions thereof.

 

9

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

 

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement
as of the date and year first above written.

 

 

EXECUTIVE

 

 

 

 

 

Name:

 

Title:

 

 

 

 

 

DEAN FOODS COMPANY

 

 

 

 

 

Name:

Russell F. Coleman

 

Title:

Executive Vice President, General Counsel

 

10

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