Exhibit 10.5

 

2018 PHANTOM SHARES AWARD AGREEMENT

 

This AGREEMENT (this “Agreement”), effective as of the Date of Grant as defined
in the Notice of Award of Phantom Shares (the “Notice of Grant”) delivered
herewith, is made and entered into by and between Dean Foods Company, a Delaware
corporation (the “Company”), and the individual named on the Notice of Grant
(“you”).

 

WITNESSETH:

 

WHEREAS, the Board of Directors of the Company has adopted and approved the Dean
Foods Company 2016 Stock Incentive Plan, as amended (the “Plan”), which Plan was
approved as required by the Company’s stockholders and provides for the grant of
stock-based awards to certain selected Employees of the Company and its
Subsidiaries (Capitalized terms used and not otherwise defined in this Agreement
shall have the meanings set forth in the Plan); and

 

WHEREAS, during your employment, and based upon your position with the Company
and/or its Subsidiaries, you have acquired and will continue to acquire, by
reason of your position, substantial knowledge of the operations and practices
of the business of the Company; and

 

WHEREAS, the Committee desires to award phantom shares (the “Phantom Shares”) in
accordance with the terms and conditions applicable to Other Stock-Based Awards
pursuant to the Plan; and

 

WHEREAS, the Company desires to assure that, to the extent and for the period of
your service and for a reasonable period thereafter, it may maintain the
confidentiality of its trade secrets and proprietary information, and protect
goodwill and other legitimate business interests, each of which could be
compromised if any competitive business were to secure your services; and

 

WHEREAS, the Phantom Shares provided for under the Plan are intended to comply
with the requirements of Rule 16b-3 under the Securities Exchange Act of 1934,
as amended; and

 

WHEREAS, the Committee has selected you to participate in the Plan and has
approved the award to you of the Phantom Shares, described in this Agreement and
in the Notice of Grant.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements herein contained, and as an inducement to you to continue as an
employee of the Company (or its Subsidiaries), you and the Company hereby agree
as follows:

 

1.              Grant of Award.  Effective as of the Date of Grant, the Company
hereby grants to you and you hereby accept, subject to the terms and conditions
set forth in the Plan and in this Agreement, the number of Phantom Shares shown
on the Notice of Grant.  Each Phantom Share represents the right to receive the
cash value of one share of the Company’s Stock, subject to the terms and
conditions set forth in the Plan and in this Agreement.  No shares of Stock
shall be issuable upon vesting of the Phantom Shares granted to you pursuant to
this Agreement. You must accept this Award in the manner designated by the
Company in the Notice of Grant (e.g. electronic acceptance) not later than 90
days after the Date of Grant, or electronic notification of such Grant,
whichever occurs later, or this Award will be rendered void and without effect.
Subject to the provisions of Sections 2(c), 2(d), 3(b) and 7 hereof, this Award
of Phantom Shares is irrevocable and is intended to conform in all respects with
the Plan.

 

2.              Vesting.

 

(a)         Regular Vesting.  Except as otherwise provided in the Plan or in
this Section 2, your Phantom Shares will vest ratably in three (3) equal annual
increments commencing on the first (1st) anniversary of the Date of Grant.

 

(b)         Accelerated Vesting.

 

(1)         Unless otherwise determined by the Committee, or except as provided
in another written agreement between you and your Employer, if your Service
terminates by reason of death, Disability or Retirement during the Restriction
Period, all the unvested Phantom Shares subject to this Award will vest in full
at the date of such termination.  Payment of amounts due pursuant to this
Section 2(b)(1) shall be distributed as provided in Section 3. For purposes of
this Agreement, “Retirement” shall be defined as your retirement from employment
or other service to the Company or any Subsidiary after you reach age 65. 
“Disability” shall be defined as your permanent and total disability (within the
meaning of Section 22(e)(3) of the Code).

 

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(2)         In the event of a Change in Control, unvested Phantom Shares will be
treated in accordance with Section 9 of the Plan.

 

(c)          Forfeiture of Unvested Phantom Shares.  Unless otherwise determined
by the Committee, or except as provided in another written agreement between you
and your Employer, if your Service terminates for any reason other than death,
Disability or Retirement during the Restriction Period, all then unvested
Phantom Shares subject to this Award will be forfeited and canceled as of the
date of such termination of Service. Notwithstanding anything to the contrary in
this Section 2, your rights with respect to unvested Phantom Shares shall in all
events be immediately forfeited and canceled as of the date of your termination
of Service for Cause as defined in Section 3(b) below.

 

(d)         Repayment.  You agree and acknowledge that this Award Agreement is
subject to any policies that the Committee may adopt from time to time with
respect to the repayment to the Company of any benefit received hereunder,
including “clawback” policies.

 

3.                   Value; Forfeiture.

 

(a)         Payment Upon Vesting.  The Company will pay to you (or to your
estate in the event of your death) the cash value of vested Phantom Shares
(including vesting pursuant to Section 2(b)(1)) as soon as administratively
practicable after such vesting date but in no event later than March 15
following the calendar year in which such vesting occurred. Notwithstanding the
immediately preceding sentence, payments with respect to any Phantom Shares
subject to this Award that become vested, as provided in Section 2(b)(1), due to
Retirement shall be distributed as soon as administratively practicable (but in
no event more than 60 days) following the date of your separation from Service
from the Company, except that, if you are a specified employee (within the
meaning of Section 409A of the Code), such distribution shall be made on the day
following the 6-month anniversary of your separation from Service.

 

Any payment made hereunder shall be calculated by multiplying the closing sales
price of the Stock on the vesting date (or, in the case of a distribution due to
Retirement, the date of your separation from service) times the number of
Phantom Shares vesting on such date in accordance with Section 2 of this
Agreement.

 

(b)         Forfeiture of Phantom Shares.  Notwithstanding any provision of this
Agreement or the Plan to the contrary, if you are discharged from the employment
of the Company or any of its Subsidiaries for Cause (as defined below), your
rights in unvested Phantom Shares subject to this Award will be immediately
forfeited and canceled as of such termination date.  For purposes of this
Agreement, “Cause” means your: (i) willful failure to perform substantially your
duties; (ii) willful or serious misconduct that has caused, or could reasonably
be expected to result in, material injury to the business or reputation of an
Employer; (iii) conviction of, or entering a plea of guilty or nolo contendere
to, a crime constituting a felony; (iv) breach of any written covenant or
agreement with an Employer, any material written policy of any Employer or any
Employer’s code of conduct or code of ethics, or (v) failure to cooperate with
an Employer in any internal investigation or administrative, regulatory or
judicial proceeding.  In addition, your Service shall be deemed to have
terminated for Cause if, after your Service has terminated (for a reason other
than Cause), facts and circumstances are discovered that would have justified a
termination for Cause.  Your Phantom Shares will also be immediately forfeited
and canceled in accordance with Section 7 upon your breach of the provisions set
forth in Section 7.

 

(c)          Compliance With Law.  The Plan, the granting and payment with
respect to any Phantom Shares and any obligations of the Company under the Plan,
shall be subject to all applicable federal, state and foreign country laws,
rules and regulations, and to such approvals by any regulatory or governmental
agency as may be required. The Company, in its discretion, may postpone the
granting and payment with respect to any Phantom Shares, and neither the Company
nor its directors or officers shall have any obligation or liability to you with
respect to any Phantom Shares that shall lapse because of such postponement.

 

4.              Stockholder Rights; Dividend Equivalent Payments.  Except as set
forth in the Plan or this Agreement, neither you nor any person claiming under
or through you shall be, or have any of the rights or privileges of, a
stockholder of the Company in respect of the Phantom Shares.  Neither you nor
any person claiming under or through you shall be entitled to receive dividends
in respect of the Phantom Shares, but shall receive a dividend equivalent
payment from the Company with respect to vested Phantom Shares in an amount
equal to the aggregate cash dividends that would have been paid on the number of
shares of Stock represented by such vested Phantom Shares if such shares of
Stock had been outstanding between the Date of Grant and the vesting date of
such vested Phantom Shares (i.e., based on the record date for determining the
stockholders of the Company entitled to receive cash dividends).  Any such
dividend equivalents shall be payable in cash on the date of payment with
respect to such vested Phantom Shares or subject to forfeiture at the

 

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same time and to the same extent, and subject to the same terms and conditions,
as apply to the underlying Phantom Shares in respect of which such dividend
equivalents are credited hereunder.

 

5.              Tax Withholding.  The Employer shall have the right to deduct
from all amounts paid to you in cash (whether under the Plan or otherwise) any
amount required by law to be withheld in respect of Awards under the Plan as may
be necessary in the opinion of the Employer to satisfy any applicable tax
withholding requirements under the laws of any country, state, province, city or
other jurisdiction, including but not limited to income taxes, capital gains
taxes, transfer taxes, and social security contributions that are required by
law to be withheld.

 

6.              Transfer of Phantom Shares.  The Phantom Shares granted herein
are not transferable except in accordance with the provisions of the Plan.

 

7.              Covenants Not to Disclose, Compete or Solicit.

 

(a)         You acknowledge that: (i) the Company is engaged in a continuous
program of research, development and production respecting its business
throughout the United States (the foregoing, together with any other businesses
in which the Company engages from the date hereof to the date of the termination
of your employment with the Company and its Subsidiaries as the “Company
Business”); (ii) your work for and position with the Company and/or one of its
Subsidiaries has allowed you, and will continue to allow you, access to trade
secrets of, and Confidential Information concerning the Company Business;
(iii) the Company Business is national and international in scope; (iv) the
Company would not have agreed to grant you this Award but for the agreements and
covenants contained in this Agreement; and (v) 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.  The Company agrees and acknowledges
that, on or following the date hereof, it will provide you with one or more of
the following: (a) authorization to access Confidential Information through a
new computer password or by other means; (b) authorization to 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; and (c) access to participate in certain restricted access meetings,
conferences or training relating to your position with the Company.  You
understand and agree 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)         For purposes of this Agreement, “Confidential Information” shall
mean all business records, trade secrets, know-how, customer lists or
compilations, terms of customer agreements, sources of supply, pricing or cost
information, financial information or personnel data and other confidential or
proprietary information used and/or obtained by you in the course of your
employment with the Company or any Subsidiary; provided that the term
“Confidential Information” will not include information which (i) is or becomes
publicly available other than as a result of a disclosure by you which is
prohibited by this agreement or by any other legal, contractual or fiduciary
obligation that you may owe to the Company or any Subsidiary, or (ii) is widely
known within one or more of the industries in which the Company or any
Subsidiary operates, or you can demonstrate was otherwise known to you prior to
becoming an employee of the Company or any Subsidiary, or (iii) is or becomes
available to you on a non-confidential basis from a source (other than the
Company or any Subsidiary, including any employee thereof) that is not
prohibited from disclosing such information to you by a legal, contractual or
fiduciary obligation to the Company or any Subsidiary.  You agree to keep
Confidential Information confidential and not to engage in unauthorized use or
disclosure of Confidential Information, and agree that upon termination of your
employment (or earlier if so requested) you will preserve and return to the
Company any and all records in your possession or control, tangible and
intangible, containing any Confidential Information. You further agree not to
keep or retain any copies of such records without written authorization from a
duly authorized officer of the Company covering the specific item retained.

 

(c)          Ancillary to the foregoing and this Award, you hereby agree that,
during the term of your employment with the Company or any Subsidiary and for a
period of one (1) year thereafter (the “Restricted Period”), you will not,
directly or indirectly, individually or on behalf of any person or entity other
than the Company or any of its Subsidiaries:  (i)  provide Competing Services
(as defined below) to any company or business (other than the Company or any
Subsidiary) engaged primarily in the manufacture, distribution, sale or
marketing of any of the Relevant Products (as defined below) in the Relevant
Market Area (as defined below);            (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 Subsidiaries, or (2) convince any Customer to change or alter any of such
Customer’s existing or prospective contractual terms and

 

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conditions with the Company or any Subsidiary; or (iii)  solicit, induce,
recruit or encourage, either directly or indirectly, any employee of the Company
or any Subsidiary to leave his or her employment with the Company or any
Subsidiary or employ or offer to employ any employee of the Company or any
Subsidiary.  For the purposes of this Section 7, an employee of the Company or
any Subsidiary shall be deemed to be an employee of the Company or any
Subsidiary while employed by the Company and for a period of 60 days thereafter.

 

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

 

(i)  to provide “Competing Services” means to provide, manage, supervise, or
consult about (whether as an employee, owner, partner, stockholder, investor,
joint venturer, lender, director, manager, officer, employee, consultant,
independent contractor, representative or agent, or otherwise) any services that
are similar in purpose or function to services you provided to the Company in
the 2-year period preceding the termination of your employment.

 

(ii)  “Customer” means any and all persons or entities who purchased any
Relevant Product from the Company or any Subsidiary during the term of your
employment with the Company or any Subsidiary and as to whom, within the course
of the last two (2) years of your employment with the Company or any Subsidiary,
(a) you or someone under your supervision had contact and/or (b) you received or
had access to Confidential Information.

 

(iii)  “Relevant Product(s)” means (i) milk (fluid, powder or other) or
milk-based beverages, (ii) creams, (iii) dairy or other non-dairy coffee
creamers or other coffee whiteners, (iv) ice cream or ice cream novelties,
(v) ice cream mix, (vi) cultured dairy products, (vii) organic dairy products
(including milk, cream and cultured dairy products) or organic juice, and/or
(viii) any other product not listed above that was developed or sold by the
Company or a Subsidiary within the course of the last two (2) years of your
employment with the Company or any Subsidiary.

 

(iv)  “Relevant Market Area” means the counties (or county equivalents) in the
United States where the Company does business (including, but not limited to, by
developing, processing, manufacturing, selling, distributing or licensing
Relevant Products), and in which your services to the Company directly or
indirectly related to, impacted or involved such Company business and./or you
received Confidential Information about such business, so long as the Company
continues to do business in that geographic market area during the Restricted
Period.

 

(e)          Notwithstanding the foregoing, you are 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.

 

(f)           Your obligation under this Section 7 shall survive the vesting or
forfeiture of your Phantom Shares. Any breach of any provision of this Section 7
will result in immediate and complete forfeiture of your unvested Phantom
Shares.  In addition, you hereby agree that if you violate any provision of this
Section 7, the Company will be entitled to injunctive relief, specific
performance, or such other legal and equitable relief as is needed to prevent or
enjoin any violation of the provisions of this Agreement in addition to and not
to the exclusion of any other remedy that may be allowed by law for damages
experienced prior to the issuance of injunctive relief.  You also agree that, if
you are found to have breached any of the time-limited covenants in this
Section 7, the time period during which you are subject to such covenant shall
be extended by one day for each day you are found to have violated such
restriction, up to a maximum of one year.

 

(g)          You acknowledge that you have given careful consideration to the
restraints imposed by this Agreement, and you fully agree that they are
necessary for the reasonable and proper protection of the business of the
Company and its Subsidiaries.  The restrictions set forth herein shall be
construed as a series of separate and severable covenants.  You agree that each
and every restraint imposed by this Agreement is reasonable with respect to
services rendered, subject matter, time period, and geographical area.  Except
as expressly set forth herein, the restraints imposed by this Agreement shall
continue during their full time periods and throughout the geographical area set
forth in this Agreement.

 

(h)         You stipulate and agree that one of the purposes of this Agreement
is to fully resolve and bring finality to any concerns over the enforceability
of the restrictive covenants described in this Section 7 (the “Restrictive
Covenants”).  You also stipulate and agree that (a) the enforceability of the
Restrictive Covenants and (b) the Company’s agreement herein to provide you with
this Award are mutually dependent clauses and obligations without which this
Agreement would not be made by the parties.  Accordingly, you agree not to sue
or otherwise pursue a legal claim to set aside or avoid enforcement of the
Restrictive Covenants.  And, in the event that you or any other party pursues a
legal challenge to the enforceability of any material provision of the
restrictions in Section 7 of this Agreement and a material provision is found
unenforceable by a court of law or other legally binding authority such that you
are no longer bound by a material provision of Section 7, then (1) your unvested
Phantom Shares shall be forfeited and (2) you hereby agree that you

 

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will return to the Company any payments paid to you hereunder (less any taxes
paid by you).  The foregoing is not intended as a liquidated damage remedy but
is instead a return-of-gains and contractual rescission remedy due to the mutual
dependent nature of the subject provisions in the Agreement.

 

(i)             If any of the Restrictive Covenants are deemed unenforceable as
written, you and the Company expressly authorize the court to revise, delete, or
add to the restrictions contained in this Section 7 to the extent necessary to
enforce the intent of the parties and to provide the goodwill, Confidential
Information, and other business interests of the Company and its Subsidiaries
with effective protection.

 

(j)            The provisions of this Section 7 are not intended to override,
supersede, reduce, modify or affect in any manner any other non-competition or
non-solicitation agreement between you and the Company or any Subsidiary, and
instead are intended to supplement any such agreements.

 

8.              Plan Incorporated.  You accept the Phantom Shares hereby granted
subject to all the provisions of the Plan, which, except as expressly
contradicted by the terms hereof, are incorporated into this Agreement,
including the provisions that authorize the Committee to administer and
interpret the Plan and which provide that the Committee’s decisions,
determinations and interpretations with respect to the Plan are final and
conclusive on all persons affected thereby.

 

9.              Assignment of Intellectual Property Rights.  In consideration of
the granting of this Phantom Share Award, you hereby agree that all right, title
and interest to any and all products, improvements or processes (“Intellectual
Property”) whatsoever, discovered, invented or conceived during the course of
employment with the Company or any of its Subsidiaries, relating to the subject
matter of the business of the Company or any of its Subsidiaries or which may be
directly or indirectly utilized in connection therewith, are vested in the
Company, and you hereby forever waive any and all interest you have in such
Intellectual Property and agree to assign such Intellectual Property to the
Company.  In addition, all writings produced in the course of work or employment
for the Company or any Subsidiary are works produced for hire and the property
of the Company and its Subsidiaries, including any copyrights for those
writings.

 

10.       Miscellaneous.

 

(a)         No Guaranteed Employment.  Nothing contained in this Agreement shall
affect the right of the Company to terminate your employment at any time, with
or without Cause, or shall be deemed to create any rights to employment on your
part. The rights and obligations arising under this Agreement are not intended
to and do not affect the employment relationship that otherwise exists between
the Company and you, whether such employment relationship is at will or defined
by an employment contract.  Moreover, this Agreement is not intended to and does
not amend any existing employment contract between the Company and you.  To the
extent there is a conflict between this Agreement and such an employment
contract, the employment contract shall govern and take priority.

 

(b)         Notices.  Any notice to be given to the Company under the terms of
this Agreement shall be addressed to the Company at its principal executive
offices, and any notice to be given to you shall be addressed to you at the
address contained in the Company’s records, or at such other address for a party
as such party may hereafter designate in writing to the other.  Any such notice
shall be deemed to have been duly given if mailed, postage prepaid, addressed as
aforesaid.

 

(c)          Binding Agreement.  Subject to the limitations in this Agreement on
the transferability by you of the Award granted herein, this Agreement shall be
binding upon and inure to the benefit of the representatives, executors,
successors or beneficiaries of the parties hereto.  This Agreement may only be
amended by a written document signed by you and the Company, provided, however,
that if the amendment is not adverse to your interests, this Agreement may be
amended by a written document executed solely by the Company.

 

(d)         Governing Law. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of Delaware and the
United States, as applicable, without reference to the conflict of laws
provisions thereof.

 

(e)          Forum.  This Agreement is accepted and entered into in Texas, and
any legal proceeding arising from or in any way regarding the Agreement shall
have its venue located exclusively in Dallas County, Texas, and the parties
hereby expressly consent and submit themselves to the personal jurisdiction and
venue of the court.

 

(f)           Severability.  Except as otherwise expressly provided for herein
in Section 7 above, if any provision of this Agreement is declared or found to
be illegal, unenforceable or void, in whole or in part, then the parties shall
be relieved of all obligations arising under such provision, but only to the
extent that it is illegal, unenforceable or void, it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to make it

 

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legal and enforceable while preserving its intent or, if that is not possible,
by substituting therefor another provision that is legal and enforceable and
achieves the same objectives.

 

(g)          Interpretation.  All section titles and captions in this Agreement
are for convenience only, shall not be deemed part of this Agreement, and in no
way shall define, limit, extend or describe the scope or intent of any
provisions of this Agreement.

 

(h)         Entire Agreement.  Except as otherwise provided for in Section 7
above, this Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.

 

(i)             No Waiver.  No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.

 

(j)            Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart.

 

(k)         Relief. In addition to all other rights or remedies available at law
or in equity, the Company shall be entitled to injunctive and other equitable
relief to prevent or enjoin any violation of the provisions of this Agreement.

 

END OF AGREEMENT

 

Electronic Signature:

Electronic Signature

 

 

 

Acceptance Date:

Acceptance date

 

 

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