<PAGE>   1
                                                                  EXHIBIT 10(B)



                SEVERANCE, CONSULTING AND NON-COMPETE AGREEMENT



     This Agreement is made and entered into as of December 5, 1996 by and
between DEAN FOODS COMPANY, a Delaware corporation (the "Company"), and THOMAS
L. ROSE ("Executive").

RECITALS:

      A.   Executive has for many years served as an executive of the
           Company, he is presently serving as President of the Company, he
           will continue to hold this office position until his successor shall
           have been elected, and he will thereafter remain an employee of the
           Company until December 31, 1996 (the "Severance Date") and serve as
           Vice-Chairman for such period as the Board of Directors determines
           in its sole discretion.

      B.   The Company desires to continue to make use of Executive's
           expertise after the Severance Date on a consulting basis and to
           prevent any competitive business from securing or utilizing the
           services of Executive to the extent and for the period hereinafter
           provided.

      C.   Executive desires to continue working for the Company on the
           terms and conditions hereinafter set forth.


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

     1. Severance Benefits. The following severance benefits, which are
required by law or contract, shall be provided to Executive:

             (a)  Five weeks of vacation compensation.

             (b)  Any benefits due under the Company's Management
                  Deferred Compensation Plan, 1989 Stock Awards Plan and any
                  qualified retirement plan.

             (c)   Executive has elected to receive a lump-sum retirement
                   benefit payable on January 2, 1997, such benefit to be 
                   provided to Executive pursuant to the Company's Amended and 
                   Restated Supplemental Benefit Plan.

     In addition, the Company will provide the following special severance
benefits to Executive:

             (d)  Executive's fiscal 1997 incentive bonus, calculated in
                  accordance with the Company's existing formula and based on
                  (i) a base pay amount equal to the wages earned by Executive
                  through the Severance Date plus the consulting fees earned by
                  Executive until the first to occur of May 25, 1997 or the

<PAGE>   2

                  end of the Consulting Term (as hereinafter defined) and       
                  (ii) a personal performance rating of 80%.  Such bonus shall
                  be payable in August, 1997.

             (e)  A severance payment, payable within 30 days
                  after the first anniversary of the end of the Consulting
                  Term, calculated in the manner set forth in clause (d) above,
                  except that the base pay amount shall be $383,000.00 and
                  provided that such bonus shall not be less than $197,000.00.

             (f)  Company life, health and dental insurance
                  benefits at employee contribution rates until October 13,
                  2001, or the date on which comparable employer-provided
                  benefits are available to Executive.

             (g)  Use of a Company-leased car comparable to the
                  car currently used by Executive until December 31, 1998 in
                  accordance with Company policies relating thereto from time
                  to time in effect.

             (h)  Payment of up to $6,000 per year for financial
                  consulting services provided to Executive until April 15,
                  1999.

             (i)  Country club dues reimbursement until December
                  31, 1998 in accordance with Company policies relating thereto
                  from time to time in effect.

             (j)  A supplemental lump sum retirement benefit,
                  payable on January 2, 1997, of $420,562, such benefit to be
                  provided to Executive in excess of the benefit to be provided
                  to him under the Company's Amended and Restated Supplemental 
                  Benefit Plan (described in Section 1(c) hereof).

             (k)  A supplemental lump sum retirement benefit,
                  payable in September, 1997, equal to 140% of the excess, if
                  any, of the 1997 fiscal bonus calculated in the manner set
                  forth in clause (d) above over $197,000.00.

             (l)  The Company's payment to Executive in fiscal
                  1998 of the final $55,500 installment of Executive's
                  relocation allowance previously agreed upon by the parties.

     The Company also agrees to amend as of the date hereof all existing
incentive stock option agreements between the Company and Executive pursuant to
the terms of the Amendment to Incentive Stock Option Agreements set forth in
Exhibit A hereto, and further agrees to amend as of the date hereof all
existing Non-Qualified Stock Option Agreements between the Company and
Executive to conform to the terms set forth in the form attached hereto as
Exhibit B.

                                       2


<PAGE>   3



     2. Nature and Term of Consulting Services. The Company hereby agrees to
engage Executive, and Executive hereby agrees to serve the Company, as a
full-time consultant during the term (the "Consulting Term") commencing on the
Severance Date and ending on the first to occur of (a) Executive's inability,
including as a result of his death or disability, or his refusal in his sole
discretion to serve as a full-time consultant of the Company as described
herein or (b) such date as the Chief Executive Officer of the Company (the
"CEO") shall determine in his sole discretion that the Executive's full-time
consulting services are no longer required.  During the Consulting Term,
Executive shall devote his best efforts and his full business time and
attention in rendering such services as reasonably requested by the CEO.

     3. Compensation Benefits.

             (a)  Consulting Fees. During the Consulting Term,
                  Executive shall be paid consulting fees in the amount of
                  $31,917.00 per month.  In the event that the Consulting Term
                  ends after May 25, 1997, Executive shall be paid one or more
                  additional consulting payments, payable within 30 days after
                  the first to occur of the end of the Consulting Term or the
                  end of each fiscal year after fiscal 1997, in an amount equal
                  to 51.4% of the consulting fees earned by Executive during
                  such fiscal year.

             (b)  Reasonable Expenses.  During the Consulting
                  Term, the Company will reimburse Executive for his reasonable
                  expenses necessarily incurred in the performance of his
                  assigned duties, subject to the Company's policies relating
                  thereto from time to time in effect.

             (c)  Performance Bonuses. Executive and the Company
                  agree that, except as otherwise described herein, all
                  existing benefits of Executive under any bonus or incentive
                  compensation plan of the Company shall be terminated and the
                  benefits described in this Agreement are substituted in lieu
                  thereof.

      4.   No Competition; Confidentiality.

     In consideration of the payments to be made to Executive hereunder and the
additional non-compete payment of $963,000, payable in 24 monthly installments
of $32,000.00 during the two-year period (the "Non-Compete Period") commencing
immediately after the end of the Consulting Term plus a final installment of
$195,000.00, payable within 30 days after the Non-Compete Period, Executive
agrees that:

             (a)  During the Consulting Term, Executive will not
                  in any manner, directly or indirectly, through any person,
                  firm or corporation, alone or as a member of a partnership or
                  as an officer, director,

                                       3


<PAGE>   4

                  stockholder, investor or employee of or in any other
                  corporation or enterprise or otherwise, engage or be engaged
                  in, or assist any other person, firm, corporation or
                  enterprise in engaging or being engaged in, the development,
                  processing, marketing, distribution or sale of any product of
                  a kind actively being developed, processed, marketed,
                  distributed or sold by the Company or any of its subsidiaries
                  or affiliates (collectively, the "Dean Companies"), in any
                  geographic area in which the Company or any of its
                  subsidiaries or affiliates is engaged in such development,
                  processing, marketing, distribution or selling (whether
                  through production, calling on customers or prospective
                  customers, or otherwise) at the end of the Consulting Term. 
                  During the Non-Compete Period, in the event that Executive
                  engages in any of the foregoing activities, all benefits,
                  consulting fees and other payments to which he would
                  otherwise be entitled hereunder, other than the benefits
                  provided in clauses (d), (j) and (k) of Section 1, shall
                  forthwith cease.  Executive further covenants and agrees
                  that, during the Consulting Term and the Non-Compete Period,
                  he shall not induce, attempt to induce, or in any way assist
                  or act in concert with any other person, firm or entity in
                  inducing or attempting to induce, any employee or agent
                  of any of the Dean Companies to terminate his, her or its
                  relationship with any of the Dean Companies.  Nothing
                  contained herein shall preclude Executive from owning less
                  than 5% of any class of publicly-traded securities of any
                  corporation.

             (b)  Executive will not divulge, furnish or make
                  accessible to anyone, otherwise than in the regular course of
                  performance of his duties hereunder, or use for his benefit
                  or for the benefit of any other person, firm, corporation or
                  other entity, any trade secret, knowledge or other
                  information with respect to the confidential or secret
                  processes, plans, devices or materials of any of the Dean
                  Companies.

             (c)  All developments, processes, inventions,
                  equipment or products, except those of a nature totally
                  unrelated to those utilized by any of the Dean Companies,
                  whether patentable or unpatentable, made, conceived or
                  resulting from work done solely by Executive or jointly with
                  Company employees or agents or acquired by him prior to the
                  end of the Consulting Term shall be the sole property of the
                  Dean Companies, irrespective of whether so made, conceived or
                  resulting from work done, or acquired, during business hours
                  or after business hours.  Executive further agrees to execute
                  all documents necessary to vest full and unencumbered title
                  thereto in the Company and to do all things deemed necessary

                                       4


<PAGE>   5

                  by the Company to obtain patent protection thereon in all     
                  countries or to maintain the same as trade secrets, if the
                  Company so elects, at the Company's expense.

             (d)  The provisions of this Section 4(b) and (c)
                  shall survive the expiration or termination of this
                  Agreement.

             (e)  If under the circumstances existing at the time
                  of enforcement of any of the provisions of this Section 4,
                  the period, scope or area described therein shall be found or
                  held to be unreasonable, the parties agree that the maximum
                  period, scope or area reasonable under the circumstances
                  shall be substituted for the stated period, scope or area.

     5. Tax Consequences.  Executive expressly acknowledges and agrees that the
payments to be made hereunder to him by the Company shall be taxed to him as
items of ordinary income and that the Company will withhold from the payments
to be made hereunder as may be required by applicable law.

     6. Relief for Breach.  Executive recognizes and agrees that his covenants
and undertakings contained herein relate to matters which, for purposes of this
Agreement exclusively, are of a special and unique character and that a breach
thereof by Executive will result in irreparable injury to the Company for which
there is no adequate remedy at law.  Executive, therefore, expressly agrees
that if he shall at any time breach or in any manner violate any of the terms
of this Agreement, the Company shall be entitled, at any time after any such
breach, to immediately obtain in any court of competent jurisdiction injunctive
relief against Executive (in addition to, and not in substitution for, any and
all other relief to which the Company may be entitled either at law or in
equity) prohibiting Executive from committing such breach or violation and
compelling compliance by Executive with his obligations hereunder.  Executive
agrees that the Company shall be entitled to recover all costs of successfully
enforcing any provision of this Agreement, including reasonable attorneys'
fees.  In the event of any breach or violation by Executive of any of his
covenants herein, any applicable non-compete period set forth in Section 4
shall be extended automatically for a period equal to the period during which
Executive committed such breach or violation.  In addition, in the event
Executive shall breach this Agreement in any manner, all benefits, consulting
fees and other payments to which he would otherwise be entitled under this
Agreement, other than the benefits provided in clauses (d), (j) and (k) of
Section 1, shall forthwith cease.

     7. Waiver and Release.  In consideration of the benefits set forth above,
Executive promises to waive and to release the Dean Companies from liability
for all rights and claims, whether or not they are presently known to exist,
that Executive has against the Dean Companies relating in any way to his
employment or separation from employment.  For the purposes of this waiver and
release, the Dean Companies should be

                                       5


<PAGE>   6

understood to also include all present and former directors, shareholders,
employees and agents of the Dean Companies.  It also means successors and
assigns of the Dean Companies.

     The rights and claims which Executive waives and releases in this
Agreement, include, to every extent allowed by law, those arising under the
Employee Retirement Income Security Act of 1974, the Civil Rights Acts of 1866,
1871 and 1964, the Rehabilitation Act of 1973, and the Age Discrimination in
Employment Act of 1967, as amended by the Older Worker's Benefit Protection Act
of 1990.  This is not a complete list, and Executive waives and releases all
similar rights and claims under all other federal, state and local
discrimination provisions and all other statutory and common law causes of
action relating in any way to his employment or separation from employment.

     The Company and Executive each agree that they shall not undertake or make
any disparaging conduct or derogatory statements concerning the other.
Further, the terms and the amounts of the benefits shall remain confidential
and shall not be disclosed by Executive to anyone other than his spouse,
financial advisor and attorney, provided they agree to nondisclosure.

     8. Personal Services; Assignment.

     (a) Executive shall perform all consulting services as an independent
contractor and not as an employee of the Company.  All payments of consulting
fees to Executive hereunder shall be made to him in person or upon his personal
receipt or endorsement, and shall not be grantable, transferable or otherwise
assignable in anticipation of payment thereof, in whole or in part, by his
voluntary or involuntary act, or by operation of law, and shall not be liable
or taken for any obligation to him; it being intended that no right to any such
payment shall occur until the conditions prescribed herein with respect thereto
shall have been complied with.

     (b) This Agreement shall be binding upon and inure to the benefit of the
parties, their legal representatives, successors and assigns, and all persons
entitled to benefits hereunder; provided, however, that Executive may not
delegate any of his duties hereunder.

     9. No Collateral.  The rights of Executive under this Agreement shall be
solely those of an unsecured creditor of the Company.

     10. Entire Agreement; Amendment.  This Agreement contains the entire
understanding and agreement between the parties with respect to the subject
matter hereof and may not be amended, modified or supplemented in any respect
except by a subsequent written agreement duly executed by Executive and the CEO
of the Company.  Executive expressly agrees that the provisions of this
Agreement supersede and replace completely as of the date hereof all agreements
relating to his compensation from any of the Dean Companies.

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<PAGE>   7



     11. Notices.  All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly received or made if mailed by
United States registered or express mail, postage paid, return receipt
requested, addressed as follows:

                    If to Executive, to:
                    
                    Thomas L. Rose
                    
                    If to the Company, to:
                    
                    Dean Foods Company
                    3600 North River Road
                    Franklin Park, Illinois 60131
                    Attention:  Chief Executive Officer

or if delivered in person to either Executive or the CEO of the Company or to
such other person or such other address as either party may hereunder designate
by written notice to the other party.  Each such communication shall be deemed
to have been given and received as of the opening of business on the second
business day after so mailed or at the time of delivery if delivered in person.

     12. Governing Law.  The provisions of this Agreement shall be construed
according to the laws of the State of Illinois, and the invalidity or
unenforceability of any paragraph or portion of this Agreement shall not affect
the remaining parts hereof.

     13. Construction.  The language used herein shall be deemed to be the
language chosen by all parties to express their mutual understanding with
respect to the subject matter of this Agreement and no rule of strict
construction shall apply to any term or provision hereof.

     14. Purchasing Power Not Guaranteed.  Except as otherwise specifically
provided herein, the monetary amounts payable pursuant to this Agreement have
been negotiated between the parties, who have taken into account the possible
effects of inflation and have specifically agreed that no adjustments of the
amounts referred to herein shall be required at any time for any reason,
including without limitation depreciation in the purchasing power of the
dollar.


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<PAGE>   8


     IN WITNESS WHEREOF, the undersigned have hereunto executed this Agreement
as of the date first above written.



                                     
/s/ Thomas L. Rose                   DEAN FOODS COMPANY
-----------------------------
Thomas L. Rose


                                     By:  /s/ Howard M. Dean
                                          ----------------------------

                                     Its: Chairman & CEO
                                          ----------------------------

                                       8


<PAGE>   9
                                                                     Exhibit A


                 AMENDMENT TO INCENTIVE STOCK OPTION AGREEMENTS


     This Amendment is made and entered into as of December ___, 1996 by and
between DEAN FOODS COMPANY, a Delaware corporation (the "Company"), and THOMAS
L. ROSE ("Executive").

     WHEREAS, the Company, pursuant to authorization of the Compensation
Committee of its Board of Directors, and Executive desire to amend all existing
incentive stock option agreements (collectively, the "ISO Agreements") between
the Company and Executive in the manner set forth herein.

     NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto amend each of the ISO Agreements as follows:

1. The first sentence of paragraph 1 of each ISO Agreement is amended by
reducing the aggregate number of Option Shares (as such term is defined in such
ISO Agreement) by 20%, provided that any fraction resulting from such reduction
is rounded up to the next higher whole number of Option Shares.

2. The second sentence of paragraph 1 of each ISO Agreement is deleted in its
entirety and the following sentence is inserted in its place:  "Your option is
not intended to be, and will not be treated as, an 'incentive stock option' as
such term is defined in Section 422A(b) of the Internal Revenue Code of 1986,
as amended (the 'Code')."

3. Paragraph 3 of each ISO Agreement is deleted in its entirety and the
following is inserted in its place:

      "3.  Your option will be exerciseable immediately as to all of the Option
      Shares."

      Except as otherwise provided in paragraph 4 hereof, your option will
      expire on the second business day immediately following the tenth
      anniversary of the Grant Date.

      Each time you wish to exercise your option to purchase Option Shares, you
      must give the Company written notice of exercise (attention Secretary),
      which notice must specify the number of full Option Shares to be
      purchased and the purchase price to be paid therefor.  You may exercise
      your option with respect to all or any part of the Option Shares, but you
      may not exercise your option as to a fraction of a full share.  Your
      written notice of exercise must be accompanied by payment in full of the
      purchase price, in the form of cash or a check, bank draft or money order
      payable to the order of the Company or shares of Company Common Stock
      already owned by you (valued at the fair market value thereof on the date
      of

<PAGE>   10

      exercise) or a combination thereof.  If you are a member of the Board or
      an officer of the Company at the time of exercise, your written notice of
      exercise must also be accompanied by your signed election pursuant to
      Section 83(b) of the Code (on a form acceptable to the Company) to
      include in your gross income for your tax year in which the exercise
      occurs the excess of the fair market value (at the time of exercise) of
      the Option Shares to be purchased over the purchase price to be paid
      therefor.  Fair market value for all purposes of this Agreement will be
      determined by the Committee."

4. Subparagraph 4(a) of each ISO Agreement is deleted in its entirety and
replaced with the following:

      "4.(a)  Except as hereinafter set forth in this paragraph 4, if your
      employment with the Company terminates for any reason, your option may be
      exercised within five (5) years after the date of such termination (in
      the event of your death, by your estate or by the person who acquired the
      right to exercise your option by bequest or inheritance or by reason of
      the laws of descent and distribution), but not beyond the second business
      day immediately following the tenth anniversary of the Grant Date."

5. Paragraph 5 of each ISO Agreement is deleted in its entirety and replaced
with the following:

      "5.  Promptly after an effective exercise of your option in whole or in
      part, the Company will make a cash payment to you equal to the percentage
      determined as provided below of the excess of the fair market value (at
      the time of the option exercise) of the Option Shares as to which you are
      then exercising your option over their option price.  The percentage
      referred to above will be determined by (a) dividing (i) the Tax Rate
      derived from the federal income tax rates in effect for your tax year in
      which the option exercise occurs by (ii) the quantity one minus such Tax
      Rate, and (b) multiplying the result by 100; subject to the limitation
      that such percentage may not exceed 100%.  The Tax Rate, for such
      purpose, will be the total (expressed as a decimal) of your individual
      state income tax rate (reduced by any federal income tax deduction
      therefor) plus the maximum marginal federal income tax rate for
      individuals such that there does not exist a lower marginal federal
      income tax rate which would be applicable if adjusted gross income or
      taxable income were increased, disregarding any alternative minimum tax
      or other alternative or add-on tax based on tax preference items."

6. Paragraph 7 of each ISO Agreement is deleted in its entirety and replaced
with the following:


<PAGE>   11


      "7.  In the event of any Change of Control prior to the expiration of
      your option, you may, at any time during the 90 days following such event
      (but not after the expiration of your option), in lieu of exercising your
      option, surrender your option to the Company and receive therefor a cash
      payment equal to the sum of:

             (a) an amount equal to the excess of (i) the highest aggregate
             fair market value, during the period beginning 30 days before and
             ending 30 days after such event, of the Option Shares as to which
             your option is surrendered, over (ii) the option price of such
             Options Shares, plus

             (b) the percentage of the amount set forth in (a) above determined
             as provided in paragraph 5 hereof based on the federal income tax
             rates in effect for your tax year in which the surrender occurs,
             subject to the limitation that such percentage may not exceed
             100%.

      If you wish to so surrender your option, you must give the Company
      written notice of surrender (attention Secretary), which notice must
      specify the number of Option Shares which then remain subject to your
      option.  A "Change of Control" will be deemed to have occurred if:  (i)
      there is a change in control of the Company that would be required to be
      reported in response to Item 5(f) of Schedule 14A of Regulation 14A,
      promulgated under the Securities Exchange Act of 1934, as amended (the
      "Exchange Act"); or (ii) any person or entity (which includes any "group"
      as such term is used in Section 13(d)(3) of the Exchange Act) is,
      directly or indirectly, the "beneficial owner" (as such term is used in
      Rule 13d-3 under the Exchange Act) of securities of the Company
      representing 20% or more of the combined voting power of the Company's
      then outstanding securities (computed as described in such Rule); or
      (iii) a majority of the members of any class of directors of the Company
      are persons who were neither nominated by the Board for election by the
      stockholders nor elected by the Board to fill vacancy(ies) on the Board;
      or (iv) the Company (or any substantial portion of its assets) is
      combined with or acquired by another person or other entity; provided,
      however, that (v) no "Change of Control" shall be deemed to have occurred
      with respect to any transaction (or series of transactions) which shall
      have been approved in advance by a majority of the Board, exclusive of
      members who are employed by or otherwise affiliated with the person or
      other entity seeking to effect the Change of Control; (vi) a "Change of
      Control" shall not include any acquisition of voting stock by any
      underwriting syndicate or underwriter for so long as such syndicate or
      underwriter holds the voting stock for distribution to the public
      pursuant to an underwriting agreement between the Company and such
      syndicate or underwriter; and (vii) a "Change of Control" shall not
      include any acquisition by any defined contribution plan which is
      qualified pursuant to the applicable provisions of the Code and is
      maintained for the benefit of the employees of the Company and/or its
      subsidiaries."
<PAGE>   12
     Except as otherwise provided herein, each of the ISO Agreements shall
remain in full force and effect unamended.

     IN WITNESS WHEREOF, the undersigned have hereunto executed this Amendment
as of the date first above written.


                                        DEAN FOODS COMPANY





       _______________________________  By:   _________________________
       Thomas L. Rose                  
                                        Its:  _________________________






<PAGE>   13
[DEAN FOODS LETTERHEAD]                                         Exhibit B


                              AMENDED AND RESTATED

                      NON-QUALIFIED STOCK OPTION AGREEMENT


                                                [Grant Date]
[Name]
[Address]
[City, State]

Dear [Name]:

     I am pleased to advise you that on [Grant Date], (the "Grant Date"), the 
Committee for the Company's 1989 Stock Awards Plan (which Plan, as the same
may hereafter be amended from time to time, is referred to as the "Plan")
granted the following option, effective and speaking as of the Grant Date:

     1.   You are hereby granted the right and option to purchase, on the
          terms and conditions hereinafter set forth, all or any part of an
          aggregate of shares of the Company's Common Stock, par value $1 per
          share (herein the "Option Shares") at a purchase price of $______ per
          Option Share.  Your option is not intended to be, and will not be
          treated as, an "incentive stock option" as such term is defined in
          Section 422A(b) of the Internal Revenue Code of 1986, as amended (the
          "Code").
     2.   Your option is irrevocable and is intended to conform in all
          respects with the Plan as presently written.  Inconsistencies between
          your option and the Plan will be resolved according to the terms of
          the Plan, a copy of which has been supplied to you.
     3.   Your option will be exercisable immediately as to all of the
          Option Shares.  Except as otherwise provided in paragraph 4 hereof,
          your option will expire on the tenth anniversary of the Grant Date.

<PAGE>   14
              Each time you wish to exercise your option to purchase Option 
          Shares, you must give the Company written notice of exercise 
          (attention Secretary), which notice must specify the number of full 
          Option Shares to be purchased and the purchase price to be paid 
          therefor. You may exercise your option with respect to all or any 
          part of the Option Shares as to which your option has become 
          exercisable, but you may not exercise your option as to a fraction 
          of a full share.  Your written notice of exercise must be accompanied
          by payment in full of the purchase price, in the form of cash or a 
          check, bank draft or money order payable to the order of the Company 
          or shares of Company Common Stock already owned by you (valued at the
          fair market value thereof on the date of exercise) or a combination 
          thereof.  If you are a member of the Board or an officer of the 
          Company at the time of exercise, your written notice of exercise must
          also be accompanied by your signed election pursuant to Section 83(b)
          of the Code (on a form acceptable to the Company) to include in your 
          gross income for your tax year in which the exercise occurs the 
          excess of the fair market value (at the time of exercise) of the 
          Option Shares to be purchased over the purchase price to be paid 
          therefor.  Fair market value for all purposes of this Agreement will 
          be determined by the Committee.
     4.   (a)  Except as hereinafter set forth in this paragraph, if your
               employment with the Company terminates  because of your
               death or disability or terminates for any other reason after you
               have reached age sixty, your option must be exercised within
               five (5) years after the date of such termination (in the event
               of your death, by your estate or by the person who acquired the
               right to exercise your option by bequest or inheritance or by
               reason of the laws of descent and distribution), to the extent
               to which your option is exercisable at the date of such
               termination, but not beyond the tenth anniversary of the Grant
               Date. If at any time you take an authorized leave of absence,
               the Committee may (but

                                      2
<PAGE>   15
               need not) determine that for this purpose you will be deemed to
               continue in the Company's or a subsidiary's employment.
          (b)  You may not under any circumstances exercise your
               option following termination of employment if you are discharged
               because of fraud, embezzlement, insubordination or other
               misconduct seriously detrimental to the Company or any
               subsidiary of the Company.  The determination of whether or not
               you have been discharged for any of the reasons specified in the
               preceding sentence will be made by the Committee, and the
               Committee's determination will be binding and conclusive on the
               Company and you.
          (c)  In any event, if you are a member of the Board or an
               officer of the Company, your option may not be exercised during
               the first six months after it is granted, except in the event of
               your death or disability prior to the expiration of such
               six-month period.
     5.   Promptly after an effective exercise of your option in whole or
          in part, the Company will make a cash payment to you equal to the
          percentage determined as provided below of the excess of the fair
          market value (at the time of the option exercise) of the Option
          Shares as to which you are then exercising your option over their
          option price.  The percentage referred to above will be determined by
          (a) dividing (i) the Tax Rate derived from the federal income tax
          rates in effect for your tax year in which the option exercise occurs
          by (ii) the quantity one minus such Tax Rate, and (b) multiplying the
          result by 100; subject to the limitation that such percentage may not
          exceed 100%.  The Tax Rate, for such purpose, will be the total
          (expressed as a decimal) of your individual state income tax rate
          (reduced by any federal income tax deduction therefor) plus the
          maximum marginal federal income tax rate for individuals such that
          there does not exist a lower marginal federal income tax rate which
          would be applicable if adjusted gross income or taxable income were

                                      3
<PAGE>   16

          increased, disregarding any alternative minimum tax or other
          alternative or add-on tax based on tax preference items.
     6.   Exercise of your option may be suspended if the Board of
          Directors or the Committee determines that securities exchange
          listing or registration or qualification under any securities laws is
          required in connection therewith and has not been completed on terms
          acceptable to the Board of Directors or the Committee.
     7.   In the event of any Change of Control prior to the expiration
          of your option, you may, at any time during the 90 days following
          such event (but not after the expiration of your option), in lieu of
          exercising your option, surrender your option to the Company and
          receive therefor a cash payment equal to the sum of:
          (a)  an amount equal to the excess of (i) the highest
               aggregate fair market value, during the period beginning 30 days
               before and ending 30 days after such event, of the Option Shares
               as to which your option is surrendered, over (ii) the option
               price of such Option Shares, plus
          (b)  the percentage of the amount set forth in (a) above
               determined as provided in paragraph 5 hereof based on the
               federal income tax rates in effect for your tax year in which
               the surrender occurs, subject to the limitation that such
               percentage may not exceed 100%.
               If you wish to so surrender your option, you must give the
          Company written notice of surrender (attention Secretary), which
          notice must specify the number of Option Shares which then remain
          subject to your option.  A "Change of Control" will be deemed to have
          occurred if:  (i) there is a change in control of the Company that
          would be required to be reported in response to Item 5(f) of Schedule
          14A of Regulation 14A, promulgated under the Securities Exchange Act
          of 1934, as amended (the "Exchange Act"); or (ii) any person or
          entity (which includes any "group" as such term is used in Section
          13(d)(3) of the Exchange Act) is, directly or indirectly, the
          "beneficial owner" (as such term is used in Rule 13d-3 under the

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<PAGE>   17

          Exchange Act) of securities of the Company representing 20% or more
          of the combined voting power of the Company's then outstanding
          securities (computed as described in such Rule); or (iii) a majority
          of the members of any class of directors of the Company are persons
          who were neither nominated by the Board for election by the
          stockholders nor elected by the Board to fill vacancy(ies) on the
          Board; or (iv) the Company (or any substantial portion of its assets)
          is combined with or acquired by another person or other entity;
          provided, however, that (v) no "Change of Control" shall be deemed to
          have occurred with respect to any transaction (or series of
          transactions) which shall have been approved in advance by a majority
          of the Board, exclusive of members who are employed by or otherwise
          affiliated with the person or other entity seeking to effect the
          Change of Control; (vi) a "Change of Control" shall not include any
          acquisition of voting stock by any underwriting syndicate or
          underwriter for so long as such syndicate or underwriter holds the
          voting stock for distribution to the public pursuant to an
          underwriting agreement between the Company and such syndicate or
          underwriter; and (vii) a "Change of Control" shall not include any
          acquisition by any defined contribution plan which is qualified
          pursuant to the applicable provisions of the Code and is maintained
          for the benefit of the employees of the Company and/or its
          subsidiaries.
     8.   The issuance of Company Common Stock to you in the event you
          exercise your option has been registered by the Company under the
          Securities Act of 1933 on the Company's Form S-8 Registration
          Statement, No. 33-33775 (the "Registration Statement").  By executing
          this Agreement, you acknowledge that you have received a copy of the
          Company's Prospectus dated March 28, 1990 (including the Appendix
          thereto giving information as of May 24, 1991), which is a part of
          the Registration Statement, and a copy of the Company's Annual Report
          to its stockholders for the year ended May __, 199_.  By executing
          this Agreement you agree that you will not reoffer, resell or
          otherwise dispose of any Option Shares in any manner which would

                                      5


<PAGE>   18
          violate the Securities Act of 1933 or any other federal or state
          securities law, and further agree to reimburse the Company for any
          loss, damage or expense of any kind which it may suffer by reason of
          any breach at any time of such agreement, including but not limited
          to any liabilities which the Company may have under the Securities
          Act of 1933 or any other federal or state securities law.  You hereby
          agree that the Company will have no obligation to you to keep
          effective or current its existing Registration Statement, or to file
          or keep effective or current any additional registration statement
          concerning any Option Shares.
     9.   (a)  In the event of any reorganization, recapitalization,
               reclassification, merger, consolidation, or sale of all or
               substantially all of the Company's assets followed by
               liquidation, which is effected in such a way that holders of the
               Company's Common Stock are entitled to receive securities or
               other assets with respect to or in exchange for the Company's
               Common Stock (an "Organic Change"), the Committee shall make
               appropriate changes to insure that your option thereafter
               represents the right to acquire, in lieu of or in addition to
               the shares of the Company's Common Stock immediately theretofore
               acquirable upon exercise, such securities or assets as may be
               issued or payable with respect to or in exchange for an
               equivalent number of shares of the Company's Common Stock; and
               in the event of any stock dividend, stock split or combination
               of shares, the Board of Directors shall make appropriate changes
               in the number of shares authorized by the Plan to be delivered
               thereafter, and the Committee shall make appropriate changes in
               the number of shares covered by your option and the exercise
               price specified herein (and in the event of a spinoff, the
               Committee may make similar changes), in order to prevent the
               dilution or enlargement of your option rights. However, no right
               to purchase or receive a fraction of a share shall be created;
               and if, as a result of any such change, a fractional share would
               result or the right to purchase or
                                      
                                      6


<PAGE>   19
               receive the same would result, the number of shares in question
               shall be decreased to the next lower whole number of shares.
          (b)  As used in this Agreement, the term "Option Shares"
               includes, in addition to the shares described in the first
               paragraph hereof as the shares subject to your option, any other
               shares or other securities which may be issued as a result of
               subparagraph (a).
     10.  Your option will not be assignable or transferable by you other
          than by will or by the laws of descent and distribution, and during
          your lifetime will be exercisable only by you or your legal
          representative.
     11.  Any notice to be given to the Company under the terms of this
          Agreement will be addressed to the Company in care of its Secretary
          at 3600 North River Road, Franklin Park, Illinois  60131, and any
          notice to be given to you will be addressed to you at the address
          given beneath your signature hereto, or at such other address as you
          may direct in writing.  Any such notice will be deemed to have been
          duly given if and when enclosed in a properly sealed envelope
          addressed as aforesaid, registered and deposited, postage and
          registry fee prepaid, in a post office or branch post office
          regularly maintained by the United States Government.
     12.  The Company may withhold from any amount owed to you by the
          Company (or may require a subsidiary or other Affiliate [as defined
          in the Plan] to withhold from any amount owed to you by it and remit
          to the Company), or may require you to remit to the Company, an
          amount sufficient to satisfy any withholding or other tax due with
          respect to any shares to be issued by the Company upon the exercise
          of your option and/or any payment to be made by the Company upon
          exercise or surrender of your option, and the Committee may defer the
          issuance of such shares and/or the making of such payment unless
          indemnified to its satisfaction.


                                      7

<PAGE>   20
     13.  Nothing in this Agreement confers any right on you to continue
          in the employ of the Company or any subsidiary or other Affiliate or
          affects in any way the right of the Company or any subsidiary or
          other Affiliate, as the case may be, to terminate your employment at
          any time.
     14.  This Agreement will be binding upon and inure to the benefit of
          any successor or successors of the Company.
     In order to evidence the grant of your option, please execute the extra
copy of this Agreement in the space provided and return the same to the
Company, whereupon this Agreement will constitute a binding option agreement
between us.

                                          Very truly yours,
                                          DEAN FOODS COMPANY

                                          By_________________________
                                            Howard M. Dean, Chairman

     The undersigned hereby acknowledges that the undersigned has carefully
read all of the provisions in this Agreement, including, without limitation,
the provision of paragraph 8 hereof regarding the effect of the undersigned's
execution of this Agreement.  The undersigned hereby agrees to be bound by all
provisions set forth in this Agreement and the Plan.


                           NAME:  _____________________________________
  
                        ADDRESS:  _____________________________________
  
                                  _____________________________________
  
              SOCIAL SECURITY #:  _____________________________________
  
                          DATED:  _____________________________________


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