Document:

<PAGE>   1
                                                                    EXHIBIT 10.2

                               DEAN FOODS COMPANY
                            SUPPLEMENTAL BENEFIT PLAN

            (As amended and restated effective as of October 1, 1996)

<PAGE>   2

                                   CERTIFICATE

                  I, Dale E. Kleber, the Secretary of Dean Foods Company, do
hereby certify that the attached is a true and correct copy of the Dean Foods
Company Supplemental Benefit Plan as amended and restated effective as of
October 1, 1996.

                                          By:  Dale E. Kleber
                                             -----------------------------------
                                          Title:  Secretary
                                                --------------------------------

Dated this 6th day of April, 2001.

<PAGE>   3

                               DEAN FOODS COMPANY
                            SUPPLEMENTAL BENEFIT PLAN

            (As amended and restated effective as of October 1, 1996)

                                Table of Contents

<TABLE>
<CAPTION>
<S>                       <C>                                                                                   <C>
ARTICLE I - Introduction and Purpose..............................................................................1
         Section 1.1.      Name...................................................................................1
         Section 1.2.      Purpose................................................................................1
         Section 1.3.      Plan Benefits for Participants Who Terminated Employment Prior to October 1, 1996......1

ARTICLE II - Participation and Benefits...........................................................................1
         Section 2.1.      Eligibility............................................................................1
         Section 2.2.      Amount, Method and Timing of Benefit Distribution......................................2

ARTICLE III - General Provisions..................................................................................3
         Section 3.1.      Funding................................................................................3
         Section 3.2.      Administration of the Plan.............................................................3
         Section 3.3.      Modification of Benefits...............................................................4
         Section 3.4.      Cessation of Benefits Under Certain Circumstances......................................4
         Section 3.5.      Payment with Respect to Incapacitated Participants or Beneficiaries....................4
         Section 3.6.      Supplements............................................................................5
         Section 3.7.      Involuntary Distributions..............................................................5
         Section 3.8.      Amendment..............................................................................5
         Section 3.9.      Plan Termination.......................................................................5
         Section 3.10.     Non-Alienation of Benefits.............................................................6
         Section 3.11.     Withholding for Taxes..................................................................6
         Section 3.12.     Immunity of Committee Members..........................................................6
         Section 3.13.     Plan Not to Affect Employment Relationship.............................................6
         Section 3.14.     Subordination of Rights................................................................6
         Section 3.15.     Notices................................................................................7
         Section 3.16.     Number and Headings....................................................................7
         Section 3.17.     Controlling Law........................................................................7
         Section 3.18.     Successors.............................................................................7
         Section 3.19.     Severability...........................................................................7
         Section 3.20.     Change of Control......................................................................7
</TABLE>

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<PAGE>   4

                               DEAN FOODS COMPANY
                            SUPPLEMENTAL BENEFIT PLAN

                                    ARTICLE I

                            Introduction and Purpose

                  Section 1.1. Name. The name of this plan shall be the "Dean
Foods Company Supplemental Benefit Plan" (the "Plan"). The Plan is a further
amendment and restatement of the "Amended and Restated Dean Foods Company
Supplemental Benefit Plan" as in effect on September 30, 1996 (the "Prior
Plan"), and shall be effective on and after October 1, 1996 (the "Effective
Date").

                  Section 1.2. Purpose. This Plan shall constitute an unfunded
nonqualified deferred compensation arrangement established for the purpose of
providing deferred compensation to a select group of management or highly
compensated employees (as defined for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) of Dean Foods
Company, a Delaware corporation and its subsidiaries and related companies (the
"Company"). The Plan is specifically intended to provide for the benefits that
would have been provided to participants in the "Dean Foods Company Salaried
Employees Pension Plan" (the "Pension Plan") and participants in the "Dean Foods
Company Savings and Investment Plan" (the "Savings Plan") under the terms of
such plans, but for the limitations of Sections 401(a)(17) and 415 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Plan may also
provide for certain other benefits as are described in such supplements to the
Plan as may be attached to and form a part of the Plan as set forth in Section
3.6.

                  Section 1.3. Plan Benefits for Participants Who Terminated
Employment Prior to October 1, 1996. The benefits provided hereunder with
respect to any individual who retired or whose employment with the Company
otherwise terminated prior to October 1, 1996, will, except as otherwise
provided herein, be governed in all respects by the terms of the Prior Plan as
in effect on the date of such individual's retirement or other termination of
employment.

                                   ARTICLE II

                           Participation and Benefits

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                  Section 2.1. Eligibility. Each employee of the Company who is
a participant in the Pension Plan and whose compensation exceeds the amount set
forth in Section 401(a)(17) of the Code shall be eligible to participate in the
Plan (a "Participant"); provided, that only those employees of the Company who
are in a select group of management or who are highly compensated (within the
meaning of Title I of ERISA) may actually become Participants.

                  Section 2.2. Amount, Method and Timing of Benefit
Distribution. (a) Savings Plan Excess Benefit. If a Participant's employment
with the Company is terminated as a result of the Participant's death or after
the Participant is credited with at least 1 year of vesting service (as
determined under the terms of the Savings Plan), the Participant or his or her
beneficiary (as designated under the Savings Plan), as the case may be, shall be
entitled to receive a benefit in an amount equal to the vested portion of the
balance which would have accumulated, based upon an interest rate of 8 percent,
from an annual contribution equal to the difference between the amount of the
matching contributions and profit sharing contributions that would have been
made under the Savings Plan with respect to such Participant for each calendar
year if the limitations of Sections 401(a)(17) and 415 of the Code were
disregarded (and assuming that the Participant had made the maximum salary
reduction contribution that is subject to matching under the Savings Plan), and
the actual amounts of such matching contributions and profit sharing
contributions made thereunder with respect to such Participant; provided that
such matching contribution shall only be credited with respect to such calendar
years for which the Participant has contributed to the Savings Plan the maximum
salary reduction contribution that is subject to matching under the Savings Plan
(or such lesser amount as may be limited by applicable law). The benefit payable
pursuant to this subparagraph (a) shall be paid in a lump sum amount to the
Participant (or, in the event of his or her death, to his or her beneficiary as
designated under the Savings Plan) at such time as the Participant's benefits
under the Savings Plan are otherwise distributed.

                  (b) Pension Plan Excess Benefit. If a Participant's employment
with the Company is terminated as a result of the Participant's death or after
the Participant is credited with at least 5 years of service (as determined
under the terms of the Pension Plan), the Participant or his or her beneficiary
(as designated under the Pension Plan), as the case may be, shall be entitled to
receive a monthly benefit in an amount equal to the excess, if any, of his or
her monthly benefit that would have accrued under the Pension Plan calculated
without regard to the limitations of Sections 401(a)(17) and 415 of the Code,
over his or her monthly benefit that actually accrued under the terms

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of the Pension Plan. The benefit payable pursuant to this subparagraph (b) shall
be payable in monthly installments to the Participant for his or her life,
commencing on his or her date of normal retirement (as determined under the
Pension Plan). A Participant may also elect to receive monthly installment
payments at any other time as is permitted under the Pension Plan, provided that
such monthly installment payments shall be actuarially reduced for any early
commencement of payment using the factors and assumptions set forth under the
Pension Plan. Upon the death of the Participant prior to his or her termination
of employment with the Company, the benefit payable pursuant to this
subparagraph (b) shall be payable to the Participant's beneficiary (as
designated under the Pension Plan) in monthly installments in the amount by
which such beneficiary's qualified pre-retirement survivor annuity benefit under
the Pension Plan (calculated without regard to the limitations of Sections
401(a)(17) and 415 of the Code) exceeds such benefit payable as determined under
the terms of the Pension Plan. Upon the request of a Participant or his or her
beneficiary, and upon the approval of the Committee, the benefit payable under
this subparagraph (b) may be paid in a lump sum amount, which lump sum amount
shall be calculated in the same manner as a lump sum amount is calculated under
the Pension Plan.

                                   ARTICLE III

                               General Provisions

                  Section 3.1. Funding. The Company may, in its sole discretion,
establish a grantor trust (as described in Section 671 of the Code) for the
purpose of accumulating assets to provide for the obligations hereunder. The
assets and income of such trust shall be subject to the claims of the general
creditors of the Company. The establishment of such a trust shall not affect the
Company's liability to pay benefits hereunder, except that any such liability
shall be offset by any payments actually made to a Participant under such trust.
Except as provided in Section 3.20, in the event such a trust is established,
the amount to be contributed thereto shall be determined by the Company and the
investment of such assets shall be made in accordance with the trust document.

                  Section 3.2. Administration of the Plan. The Plan shall be
administered by the Compensation Committee of the board of directors of the
Company (the "Committee"). The duties and authority of the Committee under the
Plan shall include (i) the interpretation of the provisions of the Plan, (ii)
the adoption of any rules and regulations which may become necessary or
advisable in the operation of the Plan, (iii) the making of such determinations
as may be permitted or required pursuant to the

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Plan, and (iv) the taking of such other actions as may be required for the
proper administration of the Plan in accordance with its terms. Any decision of
the Committee with respect to any matter within the authority of the Committee
shall be final, binding and conclusive upon the Company and each Participant,
former Participant, designated beneficiary, and each person claiming under or
through any Participant or designated beneficiary; and no additional
authorization or ratification by the board of directors of the Company shall be
required. Any action taken by the Committee with respect to any one or more
Participants shall not be binding on the Committee as to any action to be taken
with respect to any other Participant. A member of the Committee may be a
Participant, but no member of the Committee may participate in any decision
directly affecting his or her rights or the computation of his or her benefits
under the Plan. Each determination required or permitted under the Plan shall be
made by the Committee in the sole and absolute discretion of the Committee.

                  Section 3.3. Modification of Benefits. At any time following
the death of a Participant, upon the written request of any person currently
entitled to the payment of a portion or all of an installment hereunder, the
Committee, in its sole discretion, may agree to pay any one or more of the
unpaid installments (or portions thereof) in an actuarially equivalent form to
the person making such request. The Committee's decision so to pay an
installment shall be made without liability to any person.

                  Section 3.4. Cessation of Benefits Under Certain
Circumstances. Notwithstanding any other provision of the Plan, no benefits
shall be payable hereunder to a Participant or his or her beneficiary after it
has been determined, in the opinion of the Committee after a reasonable
investigation of the facts, that the Participant has (i) defaulted under or
breached any provision in any employment or consulting contract with the
Company; (ii) actively participated in a business competitive with the Company;
(iii) disclosed any trade secrets or confidential information which would be
useful to a competitor of the Company; (iv) embezzled, misapplied or otherwise
misappropriated Company funds or property; or (v) paid a bribe or received a
kickback in connection with the sale or purchase by the Company of any product,
merchandise or service.

                  Section 3.5. Payment with Respect to Incapacitated
Participants or Beneficiaries. If any person entitled to benefits under the Plan
is under a legal disability or in the Committee's opinion is incapacitated in
any way so as to be unable to manage his or her financial affairs, the Committee
may direct the payment of such benefits to such person's legal representative or
to a relative or friend of such

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person for such person's benefit, or the Committee may direct the application of
such benefits for the benefit of such person in any manner which the Committee
may select that is consistent with the Plan. Any payments made in accordance
with the foregoing provisions of this section shall be a full and complete
discharge of any liability for such payments.

                  Section 3.6. Supplements. From time to time supplements may
by amendment be attached to and form a part of the Plan and any provision
thereof shall be given the same effect that such provision would have if it was
incorporated in the basic text of the Plan. Such supplements may modify or
supplement the provisions of the Plan as they apply to particular groups of
employees or groups of Participants, shall specify the persons affected by such
supplements and shall supersede the other provisions of the Plan to the extent
necessary to eliminate inconsistencies between the Plan provisions and the
provisions of such supplements.

                  Section 3.7. Involuntary Distributions. Notwithstanding any
other provision of this Plan, the Committee may on its own initiative authorize
the Company to distribute to any Participant (or to a designated beneficiary in
the event of the Participant's death) all or any portion of the Participant's
benefits under this Plan. Such payment would be specifically authorized in the
event that there is a change in tax law, a published ruling or similar
announcement issued by the Internal Revenue Service, a regulation issued by the
Secretary of the Treasury, a decision by a court of competent jurisdiction
involving a Participant or a beneficiary, or a closing agreement made under
Section 7121 of the Code that is approved by the Internal Revenue Service and
involves a Participant, and the Committee determines that a Participant has or
will recognize income for federal income tax purposes with respect to amounts
deferred under this Plan prior to the time such amounts are paid to the
Participant.

                  Section 3.8. Amendment. The Company shall have the right to
amend the Plan by action of the board of directors of the Company (or a duly
appointed delegate thereof) from time to time, except that no such amendment
shall, without the consent of the Participant to whom deferred compensation has
been credited under this Plan, adversely affect the right of the Participant (or
his or her beneficiary) to receive payments of such deferred compensation under
the terms of this Plan.

                  Section 3.9. Plan Termination. The Plan may be terminated at
any time by action of the board of directors of the Company (or a duly appointed
delegate thereof) in its sole discretion. Notwithstanding the foregoing, no
termination of this Plan shall alter the right of a Participant (or his or her

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beneficiary) to all benefits accrued by such Participant under this Plan as of
the termination date.

                  Section 3.10. Non-Alienation of Benefits. A Participant's
rights to the amounts credited to him under the Plan shall not be grantable,
transferable, pledgeable or otherwise assignable, in whole or in part, by the
voluntary or involuntary acts of any person, or by operation of law, and shall
not be liable or taken for any obligation of such person. Any such attempted
grant, transfer, pledge or assignment shall be null and void and without any
legal effect.

                  Section 3.11. Withholding for Taxes. Notwithstanding anything
contained in this Plan to the contrary, the Company shall withhold from any
distribution made under the Plan such amount or amounts as may be required for
purposes of complying with the tax withholding provisions of the Code or any
state income tax act for purposes of paying any estate, inheritance or other tax
attributable to any amounts distributable or creditable under the Plan.

                  Section 3.12. Immunity of Committee Members. The members of
the Committee may rely upon any information, report or opinion supplied to them
by any officer of the Company or any legal counsel, independent public
accountant or actuary, and shall be fully protected in relying upon any such
information, report or opinion. No member of the Committee shall have any
liability to the Company or any Participant, former Participant, designated
beneficiary, person claiming under or through any Participant or designated
beneficiary or other person interested or concerned in connection with any
decision made by such member of the Committee pursuant to the Plan which was
based upon any such information, report or opinion if such member of the
Committee relied thereon in good faith.

                  Section 3.13. Plan Not to Affect Employment Relationship.
Neither the adoption of the Plan nor its operation shall in any way affect the
right and power of the Company to dismiss or otherwise terminate the employment
or change the terms of the employment or amount of compensation of any
Participant at any time for any reason or without cause. By accepting any
payment under this Plan, each Participant, former Participant, designated
beneficiary and each person claiming under or through such person, shall be
conclusively bound by any action or decision taken or made under the Plan by the
Committee.

                  Section 3.14. Subordination of Rights. At the Committee's
request, each Participant or designated beneficiary shall sign such documents as
the Committee may require in order to subordinate such Participant's or
designated beneficiary's

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rights under the Plan to the rights of such other creditors of the Company as
may be specified by the Committee.

                  Section 3.15. Notices. Any notice required to be given by the
Company or the Committee hereunder shall be in writing and shall be delivered in
person or by registered mail, return receipt requested. Any notice given by
registered mail shall be deemed to have been given upon the date of delivery,
correctly addressed to the last known address of the person to whom such notice
is to be given.

                  Section 3.16. Number and Headings. Wherever any words are used
herein in the singular form they shall be construed as though they were also
used in the plural form in all cases where they would so apply. Headings of
sections and subsections of the Plan are inserted for convenience of reference
and are not part of the Plan and are not to be considered in the construction
thereof.

                  Section 3.17. Controlling Law. The Plan shall be construed in
accordance with the laws of the State of Illinois to the extent not preempted by
any applicable federal law.

                  Section 3.18. Successors. The Plan is binding on all persons
entitled to benefits hereunder and their respective heirs and legal
representatives, on the Committee and its successor, and on the Company and its
successor, whether by way of merger, consolidation, purchase or otherwise.

                  Section 3.19. Severability. If any provision of the Plan shall
be held illegal or invalid for any reason, such illegality or invalidity shall
not affect the remaining provisions of the Plan, and the Plan shall be enforced
as if the invalid provisions had never been set forth therein.

                  Section 3.20. Change of Control. Upon a Change of Control (as
defined below) of the Company, the Company shall adopt an irrevocable rabbi
trust for the purpose of providing benefits hereunder and shall, immediately
prior to the Change of Control, contribute an amount to the trust that is
sufficient to pay each Participant or beneficiary the benefits to which
Participants or their beneficiaries would be entitled (as if such Participants
were fully vested in such benefits) pursuant to the terms of the Plan as of the
date on which the Change of Control occurred. No Participant shall have a right
to a distribution of his benefits solely as a result of a Change of Control of
the Company, except as otherwise provided in the Plan. A "Change of Control" of
the Company shall mean the purchase or other acquisition by any person, entity
or group of persons, within the meaning of section 13(d) or 14(d) of the
Securities Exchange Act of 1934 ("Act"), or any comparable successor provisions,
of

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beneficial ownership (within the meaning of Rule 13d-1 promulgated under the
Act) of 30 percent or more of either the outstanding shares of common stock or
the combined voting power of Company's then outstanding voting securities
entitled to vote generally, or the approval by the stockholders of Company of a
reorganization, merger or consolidation, in each case, with respect to which
persons who were stockholders of Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter own more
than 50 percent of the combined voting power entitled to vote generally in the
election of directors of the reorganized, merged or consolidated Company's then
outstanding securities, or a liquidation or dissolution of Company or of the
sale of all or substantially all of Company's assets.

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                                  SUPPLEMENT A
                                     TO THE
                               DEAN FOODS COMPANY
                            SUPPLEMENTAL BENEFIT PLAN

                  A-1 Purpose. The purpose of this Supplement A is to set forth
certain provisions applicable to certain participants in the "Amended and
Restated Dean Foods Company Supplemental Benefit Plan" as in effect on September
30, 1996 (the "Prior Plan"), who subsequently became Participants in this Plan.
The Prior Plan was amended and restated effective as of October 1, 1996; and
this Supplement A is intended to preserve certain features of the Prior Plan for
the benefit of participants in this Supplement A.

                  A-2 Conflicts between Plan and Supplement A. The terms of this
Supplement A and the terms of the Plan constitute the sole provisions applicable
to participants in this Supplement A for purposes of the Plan. However, in the
event of any conflict between the provisions of the Plan and the provisions of
this Supplement A, the terms and provisions of this Supplement A shall be
controlling to the extent necessary to resolve or eliminate such conflict.

                  A-3 Supplement A Participants. This Supplement A shall be
applicable to each Participant in the Plan who was an officer of the Company on
October 1, 1996 and was a participant in the Prior Plan on or before October 1,
1996 ("Prior Plan Participants").

                  A-4 Amount of Benefit. If the employment with the Company of a
Prior Plan Participant terminates as a result of the Participant's death or
after the Participant has attained the age of 60 years (such date of termination
of employment referred to herein as the "Benefit Entitlement Date"), the
Participant or his beneficiary (as defined in Paragraph A-7 below), as the case
may be, shall be entitled to receive the benefit payable under Section 2.2(a) of
the Plan and a benefit in an amount that is the greater of:

                  (i)      the amount of the benefit that is payable as
                           determined under the provisions of Section 2.2(b) of
                           the Plan;

                           or

                  (ii)     (A) the amount that is the actuarially equivalent
                           life annuity of a monthly installment payment in the
                           amount of 20 percent of the Prior Plan Participant's
                           "Compensation Base" (as defined in Paragraph A-5
                           below) payable in the form of a 120

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                           month certain payment commencing on the Participant's
                           normal retirement date, plus (B) the amount of the
                           benefit that would be determined under the provisions
                           of Section 2.2(b) of the Plan using the definition of
                           "compensation" set forth in the Pension Plan prior to
                           January 1, 1995.

                  A-5 Compensation Base. For purposes of this Supplement A, a
Prior Plan Participant's "Compensation Base" shall be the greater of (i) his
"Final Compensation," and (ii) his "Highest Five-Year Average Compensation." A
Prior Plan Participant's "Final Compensation" shall be one-twelfth of the sum of
the Prior Plan Participant's "compensation" for the 12 consecutive full calendar
months of employment prior to his Benefit Entitlement Date. A Prior Plan
Participant's "Highest Five-Year Average Compensation" shall be one-sixtieth of
the sum of his "compensation" for the 60 consecutive full calendar months of
employment out of the last 180 full calendar months of employment prior to his
Benefit Entitlement Date which produce the highest sum, or, if the Prior Plan
Participant has less than 60 consecutive full calendar months of employment
prior to his Benefit Entitlement Date, the quotient derived from dividing (A)
the sum of the Prior Plan Participant's "compensation" for his last consecutive
full calendar months of employment by (B) the number of such months. For
purposes of this Paragraph A-5, a Prior Plan Participant's "compensation" for a
calendar month shall be comprised of such of the following amounts as are
applicable to the Prior Plan Participant: (a) base salary paid; (b) cash bonus
paid; (c) stock bonuses paid in lieu of cash bonuses at the election of the
Prior Plan Participant, but excluding any portion of the value of such stock
bonuses at the time of their issuance in excess of the amount of such cash
bonuses and further excluding any amount paid under the Performance Share Plan;
(d) commissions paid; and (e) amounts (other than interest) the Participant has
deferred under any deferred compensation plan or agreement with the Company
(other than this Plan). For purposes of this Paragraph A-5, the Benefit
Entitlement Date for a Prior Plan Participant shall be deemed to occur no later
than the date on which such Prior Plan Participant attains age 65. The term
"compensation" shall not include any amounts paid to a Prior Plan Participant
solely as a result of a change in control of the Company.

                  A-6 Method and Timing of Benefit Distribution. Any amounts
payable pursuant to the provisions of subparagraph (i) of Paragraph A-4 above
shall be payable at such time and in such manner as are set forth in Section
2.2(b) of the Plan. Any amounts payable pursuant to the provisions of
subparagraph (ii) of Paragraph A-4 above shall be payable at such time and in
such manner as are set forth in Section 2.2(b) of the Plan, except that such
amount payable pursuant to subparagraph (ii)(A) of

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Paragraph A-4 above may, at the election of the Participant, be payable in the
form of a 120 month certain payment, and provided that any lump sum payment of
the amount payable pursuant to subparagraph (ii)(A) of Paragraph A-4 above for
any Participant who had attained the age of 60 at October 1, 1996 shall be
computed using the actuarial assumptions set forth in the Prior Plan.

                  A-7 Beneficiaries. Any amounts payable to a beneficiary
pursuant to the provisions of subparagraph (ii) of Paragraph A-4 above shall be
payable to such beneficiary as the Prior Plan Participant has designated under
the Pension Plan.

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                                  SUPPLEMENT B
                                     TO THE
                               DEAN FOODS COMPANY
                            SUPPLEMENTAL BENEFIT PLAN

                  B-1 Purpose. The purpose of this Supplement B is to set forth
certain provisions applicable to certain participants in the "Amended and
Restated Dean Foods Company Supplemental Benefit Plan" as in effect on September
30, 1996 (the "Prior Plan"), who subsequently became Participants in this Plan.
The Prior Plan was amended and restated effective as of October 1, 1996; and
this Supplement B is intended to preserve certain features of the Prior Plan for
the benefit of participants in this Supplement B.

                  B-2 Conflicts between Plan and Supplement B. The terms of this
Supplement B and the terms of the Plan constitute the sole provisions applicable
to participants in this Supplement B for purposes of the Plan. However, in the
event of any conflict between the provisions of the Plan and the provisions of
this Supplement B, the terms and provisions of this Supplement B shall be
controlling to the extent necessary to resolve or eliminate such conflict.

                  B-3 Supplement B Participants. This Supplement B shall be
applicable to the following Participants in the Plan who were participants in
the Prior Plan on October 1, 1996 ("Prior Plan Participants"): Howard M. Dean.

                  B-4 Amount of Benefit. If the employment with the Company of a
Prior Plan Participant terminates as a result of the Participant's death or
after the Participant has attained the age of 60 years (such date of termination
of employment referred to herein as the "Benefit Entitlement Date"), the
Participant or his beneficiary (as defined in Paragraph B-7 below), as the case
may be, shall be entitled to receive the benefit payable under Section 2.2(a) of
the Plan and a benefit in an amount that is the greater of:

                  (i)      the amount of the benefit that is payable as
                           determined under the provisions of Section 2.2(b) of
                           the Plan;

                           or

                  (ii)     the greater of:

                           (A) (1) the amount that is the actuarially equivalent
                           life annuity of a monthly installment payment in the
                           amount of 20 percent of the Prior Plan Participant's
                           "Compensation Base" (as defined

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<PAGE>   16

                           in Paragraph B-5 below) payable in the form of an
                           annuity payable for the life of the Prior Plan
                           Participant, or, if longer, for 180 months following
                           his retirement, commencing on the Participant's
                           normal retirement date, plus (2) the amount of the
                           benefit that would be determined under the provisions
                           of Section 2.2(b) of the Plan using the definition of
                           "compensation" set forth in the Pension Plan prior to
                           January 1, 1995; or

                           (B) the amount that is the actuarially equivalent
                           life annuity of a monthly installment payment in the
                           amount of the excess of 55 percent of the Prior Plan
                           Participant's "Compensation Base" (as defined in
                           Paragraph B-5 below) payable for the life of the
                           Prior Plan Participant or, if longer, for 180 months
                           following his retirement, over the sum of the amount
                           payable under the Pension Plan and the pension
                           equivalent of the amount payable under the Savings
                           Plan, minus the amount of the benefit that would be
                           determined under the provisions of Section 2.2(a) of
                           the Plan.

                  B-5 Compensation Base. For purposes of this Supplement B, a
Prior Plan Participant's "Compensation Base" shall be the greater of (i) his
"Final Compensation," and (ii) his "Highest Five-Year Average Compensation." A
Prior Plan Participant's "Final Compensation" shall be one-twelfth of the sum of
the Prior Plan Participant's "compensation" for the 12 consecutive full calendar
months of employment prior to his Benefit Entitlement Date. A Prior Plan
Participant's "Highest Five-Year Average Compensation" shall be one-sixtieth of
the sum of his "compensation" for the 60 consecutive full calendar months of
employment out of the last 180 full calendar months of employment prior to his
Benefit Entitlement Date which produce the highest sum, or, if the Prior Plan
Participant has less than 60 consecutive full calendar months of employment
prior to his Benefit Entitlement Date, the quotient derived from dividing (A)
the sum of the Prior Plan Participant's "compensation" for his last consecutive
full calendar months of employment by (B) the number of such months. For
purposes of this Paragraph B-5, a Prior Plan Participant's "compensation" for a
calendar month shall be comprised of such of the following amounts as are
applicable to the Prior Plan Participant: (a) base salary paid; (b) cash bonus
paid; (c) stock bonuses paid in lieu of cash bonuses at the election of the
Prior Plan Participant, but excluding any portion of the value of such stock
bonuses at the time of their issuance in excess of the amount of such cash
bonuses and further excluding any amount payable under the Performance Share
Plan; (d) commissions paid; and (e) amounts (other than interest) the
Participant has deferred under any

                                       2
<PAGE>   17

deferred compensation plan or agreement with the Company (other than this Plan).
For purposes of this Paragraph B-5, the Benefit Entitlement Date for a Prior
Plan Participant shall be deemed to occur no later than the date on which such
Prior Plan Participant attains age 65. The term "compensation" shall not include
any amounts paid to a Prior Plan Participant solely as a result of a change in
control of the Company.

                  B-6 Method and Timing of Benefit Distribution. Any amounts
payable pursuant to the provisions of subparagraph (i) of Paragraph B-4 above
shall be payable at such time and in such manner as are set forth in Section
2.2(b) of the Plan. Any amounts payable pursuant to the provisions of
subparagraphs (ii)(A) and (ii)(B) of Paragraph B-4 above shall be payable at
such time and in such manner as are set forth in Section 2.2(b) of the Plan,
except that such amounts payable pursuant to subparagraphs (ii)(A)(1) and
(ii)(B) thereof may, at the election of the Participant, be payable in the form
of an annuity payable for the life of the Prior Plan Participant or, if longer,
for 180 months following his retirement. Notwithstanding the foregoing, the
amount of any lump sum distribution payable with respect to the benefit
described at subparagraph (ii) above for any Participant who had attained the
age of 60 at October 1, 1996 shall be computed using the Pension Benefit
Guaranty Corporation Immediate Annuity Rate and the UP-1971 Mortality Table.

                  B-7 Beneficiaries. Any amounts payable to a beneficiary
pursuant to the provisions of subparagraph (ii) of Paragraph B-4 above shall be
payable to such beneficiary as the Prior Plan Participant has designated under
the Pension Plan.

                                       3<PAGE>   1
                                                                    EXHIBIT 10.3

                               DEAN FOODS COMPANY
                         1996 DIRECTOR STOCK AWARDS PLAN

         1. Purpose. The purpose of this Plan (the "Plan") is to promote the
long- term financial interests of the Company and its subsidiaries by:

            (a) providing an incentive for all non-employee members of the Board
            of Directors (the "Non-Employee Directors") to maximize the
            long-term value of the Company's Common Stock and otherwise act in
            the best interest of the Company's stockholders;

            (b) providing Non-Employee Directors with the opportunity to acquire
            a greater stake in the future of the Company and its subsidiaries
            through stock ownership; and

            (c) attracting and retaining highly qualified Non-Employee Directors
            who will contribute in exceptional ways to the long-term financial
            success of the Company and its subsidiaries.

         2. Definitions. The following definitions are applicable to the Plan:

            "Board of Directors" means the Board of Directors of the Company.

            "Code" means the Internal Revenue Code of 1986, as amended, and any
            successor statute.

            "Common Stock" means Common Stock, $1.00 par value, of the Company
            or such other securities as may be substituted therefor pursuant to
            paragraph 5(c).

            "Company" means Dean Foods Company, a Delaware corporation, and its
            successors.

            "Eligible Director" means any present or future member of the Board
            of Directors who, on the date of an award pursuant to the Plan, (a)
            is a member of the Board of Directors, and (b) is not an employee of
            the Company or any of its subsidiaries.

            The "fair market value" of the Common Stock on any date means the
            closing price of Common Stock on that date (or, if such date is not
            a trading date, on the next preceding date which was a trading date)
            on the

<PAGE>   2

            New York Stock Exchange Composite Transactions list, as subsequently
            reported in The Wall Street Journal.

                  "participant" means any Eligible Director who has been granted
            an award pursuant to the Plan.

         3. Limitation on Aggregate Shares. Subject to adjustment as provided in
paragraph 5(c), the number of shares of Common Stock which may be issued upon
the exercise or payment of awards granted under the Plan shall not exceed, in
the aggregate, 100,000 shares; it being understood that to the extent any awards
expire unexercised or unpaid or are cancelled, terminated or forfeited in any
manner without the issuance of shares of Common Stock thereunder, such shares
shall again be available under the Plan. Such 100,000 shares of Common Stock
shall be treasury shares.

         4. Awards. The Board of Directors may grant to Eligible Directors, in
accordance with this paragraph 4 and the other provisions of the Plan, stock
options and restricted stock.

                  (a)      Options.

                           (i) Options granted under the Plan shall not qualify
                  as incentive stock options within the meaning of Section 422A
                  of the Code or any successor provision.

                           (ii) The option price per share of Common Stock shall
                  be 100% of the fair market value of a share of Common Stock on
                  the date of grant and not less than the par value of a share
                  of Common Stock.

                           (iii) Options shall be exercisable at such time or
                  times as the Board of Directors shall determine at or
                  subsequent to grant.

                           (iv) An option shall be exercised in whole or in part
                  by written notice to the Company (to the attention of the
                  Secretary) at any time prior to its stated expiration and
                  payment in full of the option price for the shares as to which
                  the option is being exercised. Payment of the option price may
                  be made, at the discretion of the optionee, and to the extent
                  permitted by the Board of Directors, (A) in cash (including
                  check, bank draft, or money order), (B) in Common Stock
                  already owned by the optionee (valued at the fair market value
                  thereof on the date of exercise), (C) by a combination of cash
                  and Common Stock, or (D) with any other consideration.

                                       2
<PAGE>   3

                  (b) Restricted Stock.

                           (i) The Board of Directors may award to any Eligible
                  Director shares of Common Stock, subject to this paragraph
                  4(b) and such other terms and conditions as the Board of
                  Directors may prescribe (such shares being called "restricted
                  stock"). Each certificate for restricted stock shall be
                  registered in the name of the participant and deposited,
                  together with a stock power endorsed in blank, with the
                  Company.

                           (ii) Restricted stock may be awarded without any
                  consideration other than services rendered and/or (to the
                  extent permitted by applicable corporate law on the date of
                  award) services to be rendered.

                           (iii) There shall be established for each restricted
                  stock award a restriction period (the "restriction period") of
                  such length as shall be determined by the Board of Directors.
                  Shares of restricted stock may not be sold, assigned,
                  transferred, pledged or otherwise encumbered, except as
                  hereinafter provided, during the restriction period. Except
                  for such restrictions on transfer and such other restrictions
                  as the Board of Directors may impose, the participant shall
                  have all the rights of a holder of Common Stock as to such
                  restricted stock. The Board of Directors, in its sole
                  discretion, may permit or require the payment of cash
                  dividends to be deferred and, if the Board of Directors so
                  determines, reinvested in additional restricted stock or
                  otherwise invested or accruing a yield. At the expiration of
                  the restriction period, the Company shall redeliver to the
                  participant (or the participant's legal representative or
                  designated beneficiary) the certificate deposited pursuant to
                  this paragraph.

                           (iv) Except as provided by the Board of Directors at
                  or subsequent to the time of grant, upon termination of
                  service of a participant as a member of the Board of Directors
                  for any reason (including, without limitation, expiration of
                  term without reelection, resignation, retirement, total
                  disability or death) during the restriction period, all shares
                  still subject to restriction shall be forfeited by the
                  participant.

                  (c) Cash Payments. Options may, in the Board of Directors'
                  discretion, provide that in connection with exercises thereof
                  the holders will receive cash payments based on formulas
                  designed to reimburse holders for their income tax liability
                  resulting from such exercise and the payment made pursuant to
                  this paragraph 4(c).

                                       3
<PAGE>   4

                  (d) Surrender. If so provided by the Board of Directors at or
                  subsequent to the time of grant, an award may be surrendered
                  to the Company on such terms and conditions, and for such
                  consideration, as the Board of Directors shall determine.

                  (e) Award Forms. The form of each award (and of the
                  documentation evidencing each award) shall be determined by
                  the Board of Directors.

         5. Miscellaneous Provisions.

                  (a) Administration. The Plan shall be administered by the
                  Board of Directors. Subject to the limitations of the Plan,
                  the Board of Directors shall have the sole and complete
                  authority: (i) to select participants, (ii) to make awards in
                  such forms and amounts as it shall determine, (iii) to impose
                  such limitations, restrictions and conditions upon such awards
                  as it shall deem appropriate, (iv) to interpret the Plan and
                  to adopt, amend and rescind administrative guidelines and
                  other rules and regulations relating to the Plan, (v) to
                  correct any defect or omission or to reconcile any
                  inconsistency in the Plan or in any award granted hereunder
                  and (vi) to make all other determinations and to take all
                  other actions necessary or advisable for the implementation
                  and administration of the Plan. The Board of Directors'
                  determinations on matters within its authority shall be
                  conclusive and binding upon the Company and all other persons.
                  All expenses associated with the Plan shall be borne by the
                  Company.

                  (b) Non-Transferability. No award under the Plan, and no
                  interest therein, shall be transferable by a participant
                  otherwise than by will or the laws of descent and
                  distribution. All awards shall be exercisable or received
                  during a participant's lifetime only by the participant or the
                  participant's legal representative. Any purported transfer
                  contrary to this provision will nullify the award.

                  (c) Adjustments Upon Certain Changes. 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 Common Stock are entitled to
                  receive securities or other assets with respect to or in
                  exchange for Common Stock (an "Organic Change"), the Board of
                  Directors shall make appropriate changes to insure that each
                  outstanding award involving the right to acquire Common Stock
                  thereafter represents the right to acquire, in lieu of or in
                  addition to the shares of Common Stock immediately theretofore
                  acquirable upon exercise or payment, such securities or assets
                  as may be issued or payable with respect to or in exchange for
                  an equivalent number of shares of Common Stock; and in the

                                       4
<PAGE>   5

                  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 in the numbers of shares covered by outstanding
                  awards and the exercise prices specified therein (and in the
                  event of a spin-off, the Board of Directors may make similar
                  changes), in order to prevent the dilution or enlargement of
                  award 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 receive the same would result, the number of
                  shares in question shall be decreased to the next lower whole
                  number of shares. The Board of Directors may provide, in the
                  agreement evidencing any award, for adjustments to such award
                  in order to prevent the dilution or enlargement of rights
                  thereunder or for acceleration of benefits thereunder and/or
                  cash payments in lieu of benefits thereunder in the event of a
                  change in control (or tender offer or accumulation of Common
                  Stock), merger, consolidation, reorganization,
                  recapitalization, sale or exchange of all or substantially all
                  of the assets or dissolution of the Company.

                  (d) Tax Withholding. The Board of Directors shall have the
                  power to withhold, or require a participant to remit to the
                  Company, an amount sufficient to satisfy any withholding or
                  other tax due with respect to any amount payable and/or shares
                  issuable under the Plan, and the Board of Directors may defer
                  such payment or issuance unless indemnified to its
                  satisfaction. Subject to the consent of the Board of
                  Directors, a participant may make an irrevocable election to
                  have shares of Common Stock otherwise issuable under an award
                  withheld, tender back to the Company shares of Common Stock
                  received pursuant to an award or deliver to the Company shares
                  of Common Stock already owned by the participant having a fair
                  market value sufficient to satisfy all or part of the
                  participant's estimated tax obligations associated with the
                  transaction. Such election must be made by a participant prior
                  to the date on which the relevant tax obligation arises. The
                  Board of Directors may disapprove of any election and may
                  limit, suspend or terminate the right to make such elections.

                  (e) Listing and Legal Compliance. The Board of Directors may
                  suspend the exercise or payment of any award if it 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.

                  (f) Rights of Participants. Nothing in the Plan shall confer
                  on any Eligible Director any right to continue to serve as a
                  member of the Board of Directors or affect in any way the
                  right of the Company to terminate such service at any time. No
                  Eligible Director shall have a right to be

                                       5
<PAGE>   6

                  selected as a participant, or, having been so selected, to be
                  selected again as a participant.

                  (g) Amendment, Suspension and Termination of Plan. The Board
                  of Directors may suspend or terminate the Plan or any portion
                  thereof at any time and may amend it from time to time in such
                  respects as the Board of Directors may deem advisable;
                  provided, however, that no such amendment shall be made
                  without stockholder approval to the extent such approval is
                  required by law, agreement or the rules of any exchange upon
                  which the Common Stock is listed. No such amendment,
                  suspension or termination shall impair the rights of
                  participants under outstanding awards without the consent of
                  the participants affected thereby.

                           The Board of Directors may amend or modify any award
                  in any manner to the extent that the Board of Directors would
                  have had the authority under the Plan to initially grant the
                  award as so amended or modified. No such amendment or
                  modification shall impair the rights of the participant under
                  such award without the consent of such participant.

         6. Effective Date. The effective date of the Plan shall be October 1,
1996, the date of its adoption by the Board of Directors.

                                       6
<PAGE>   7

    FIRST AMENDMENT TO THE DEAN FOODS COMPANY 1996 DIRECTOR STOCK AWARDS PLAN

         This First Amendment to the Dean Foods Company 1996 Director Stock
Awards Plan (the "Plan") is effective as of May 26, 2000.

         1. Paragraph 3 of the Plan shall be deleted in its entirety and
         replaced by the following paragraph:

         Limitation on Aggregate Shares. Subject to adjustment as provided in
         paragraph 5(c), the number of shares of Common Stock which may be
         issued upon the exercise or payment of awards granted under the Plan
         shall not exceed, in the aggregate, 200,000 shares; it being understood
         that to the extent any awards expire unexercised or unpaid or are
         cancelled, terminated or forfeited in any manner without the issuance
         of shares of Common Stock thereunder, such shares shall again be
         available under the Plan. Such 200,000 shares of Common Stock shall be
         treasury shares.

         2. The Plan shall continue in full force and effect in accordance with
         its terms, as amended hereby.

                                       7

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