Document:

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                                                                    EXHIBIT 10.3

               AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT

                                       OF

                          SUIZA FLUID DAIRY GROUP, L.P.

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               AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT

                                       OF

                          SUIZA FLUID DAIRY GROUP, L.P.

                                TABLE OF CONTENTS

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<S>               <C>                                                                                         <C>
ARTICLE I         ORGANIZATIONAL MATTERS..........................................................................1

     1.1   Formation..............................................................................................1
     1.2   Name...................................................................................................1
     1.3   Registered Office and Principal Office of Partnership; Addresses of Partners...........................1
     1.4   Term...................................................................................................2
     1.5   Assumed Name Certificate...............................................................................2
     1.6   Ownership..............................................................................................2
     1.7   No Individual Authority................................................................................2
     1.8   Title to Partnership Property..........................................................................2
     1.9   Limits of Partnership..................................................................................2

ARTICLE II          DEFINITIONS...................................................................................2

ARTICLE III         PURPOSE......................................................................................11

     3.1   Purposes and Scope....................................................................................11

ARTICLE IV          CAPITAL CONTRIBUTIONS........................................................................11

     4.1   Initial Capital Contributions.........................................................................11
     4.2   Non-Contemplated Contributions........................................................................12
     4.3   New Investment Contributions..........................................................................13
     4.4   Capital Accounts......................................................................................14
     4.5   Interest..............................................................................................17
     4.6   No Withdrawal.........................................................................................17
     4.7   Limitation on Capital Contributions and Loans.........................................................17

ARTICLE V           ALLOCATIONS..................................................................................18

     5.1   Allocation of Profits and Losses......................................................................18
     5.2   Special Allocations...................................................................................20
     5.3   Curative Allocations..................................................................................21
     5.4   Tax Allocations: Code Section 704(c)..................................................................21
     5.5   Other Allocation Rules................................................................................22
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<S>                 <C>                                                                                         <C>
ARTICLE VI          DISTRIBUTIONS................................................................................22

     6.1   Distributions of Available Cash.......................................................................22
     6.2   Amounts Withheld......................................................................................23
     6.3   Excess Distributions..................................................................................23
     6.4   Tax Distributions.....................................................................................24
     6.5   Payments Not Deemed Distributions.....................................................................24

ARTICLE VII           MANAGEMENT OF THE PARTNERSHIP..............................................................25

     7.1   Management Committee..................................................................................25
     7.2   Major Decisions.......................................................................................25
     7.3   Approval of Major Decisions...........................................................................26
     7.4   Officers..............................................................................................27
     7.5   Certificate of Limited Partnership; Qualifications to do Business.....................................28
     7.6   Compensation and Reimbursement of Partner Expenses;
           Other Agreements with Partners........................................................................28
     7.7   Outside Activities; Noncompetition....................................................................28
     7.8   Partnership Funds.....................................................................................30
     7.9   Transactions with Affiliates..........................................................................30
     7.10   Indemnification......................................................................................30
     7.11   Liability of the Partnership.........................................................................30
     7.12   Suiza Foods Board Seat...............................................................................31

ARTICLE VIII          RIGHTS AND OBLIGATIONS OF PARTNERS.........................................................31

     8.1   Limitation of Liability...............................................................................31
     8.2   Return of Capital.....................................................................................31

ARTICLE IX          BOOKS, RECORDS, ACCOUNTING AND REPORTS.......................................................31

     9.1   Records and Accounting................................................................................31
     9.2   Fiscal Year...........................................................................................31
     9.3   Reports...............................................................................................32
     9.4   Documents.............................................................................................32

ARTICLE X           TAX MATTERS..................................................................................32

     10.1   Tax Matters Partner..................................................................................32
     10.2   Annual Tax Returns...................................................................................32
     10.3   Notice and Limitations on Authority..................................................................33
     10.4   Tax Elections........................................................................................34
     10.5   Actions in Event of Audit............................................................................34
     10.6   Organizational Expenses..............................................................................34
     10.7   Taxation as a Partnership............................................................................34

ARTICLE XI          TRANSFERS OF PARTNER INTERESTS...............................................................34

     11.1   Transfer Restrictions................................................................................34
     11.2   Consent of the Management Committee..................................................................35
     11.3   Tax Opinion..........................................................................................35
     11.4   Registration.........................................................................................35
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<S>                  <C>                                                                                         <C>
     11.5   Prohibited Transfers.................................................................................35
     11.6   Rights of Assignee...................................................................................35
     11.7   Admission as a Partner...............................................................................36
     11.8   Distributions and Allocations in Respect of Transferred Partner Interests............................36
     11.9   Suiza Buy-Out Option.................................................................................37
     11.10  DFA Registration Right...............................................................................37

ARTICLE XII          DISSOLUTION AND LIQUIDATION.................................................................38

     12.1   Dissolution..........................................................................................38
     12.2   Continuation of the Partnership......................................................................38
     12.3   Liquidation..........................................................................................39
     12.4   Reserves.............................................................................................40
     12.5   Distribution in Kind.................................................................................40
     12.6   Disposition of Documents and Records.................................................................40
     12.7   Negative Capital Accounts............................................................................40
     12.8   Filing of Certificate of Cancellation................................................................41
     12.9   Return of Capital....................................................................................41
     12.10  Waiver of Partition..................................................................................41

ARTICLE XIII          AMENDMENT OF AGREEMENT.....................................................................41

     13.1   Amendment Procedures.................................................................................41

ARTICLE XIV           GENERAL PROVISIONS.........................................................................41

     14.1   Addresses and Notices................................................................................41
     14.2   Titles and Captions..................................................................................42
     14.3   Pronouns and Plurals.................................................................................42
     14.4   Further Action.......................................................................................43
     14.5   Binding Effect.......................................................................................43
     14.6   Integration..........................................................................................43
     14.7   No Third Party Beneficiary...........................................................................43
     14.8   Waiver...............................................................................................43
     14.9   Counterparts.........................................................................................43
     14.10  Applicable Law.......................................................................................43
     14.11  Invalidity of Provisions.............................................................................43
     14.12  Confidentiality......................................................................................44
</TABLE>

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               AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT

                                       OF

                          SUIZA FLUID DAIRY GROUP, L.P.

         This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of SUIZA FLUID
DAIRY GROUP, L.P. (the "Agreement") is entered into as of the ___ day of
___________, 2000, by and among Suiza Fluid Dairy Group GP, L.L.C., a Delaware
limited liability company, as the General Partner ("Suiza GP" or the "General
Partner"), and Suiza Fluid Dairy Group Holdings, Inc., a Nevada corporation
("SFDG Holdings"), Dairy Farmers of America, Inc., a Kansas cooperative
marketing association ("DFA"), Mid-Am Capital, L.L.C., a Delaware limited
liability company ("Mid-Am") as Limited Partners (together, the "Limited
Partners," and with Suiza Management, the "Partners"), together with any Person
who becomes a Partner as provided herein.

                                    ARTICLE I

                             ORGANIZATIONAL MATTERS

         1.1 Formation. The Partnership was formed as a limited partnership in
accordance with the Delaware Act on September 20, 1999, pursuant to the
provisions of the Delaware Act. The Partners hereby enter into this Agreement in
order to set forth the rights and obligations of the Partners and certain
matters related thereto. Except as expressly provided and permitted herein to
the contrary, the rights and obligations of the Partners and the administration
and termination of the Partnership shall be governed by the Delaware Act.

         1.2 Name. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, "Suiza Fluid Dairy Group,
L.P." The Partnership's business may also be conducted under any additional name
or names approved by the Management Committee from time to time.

         1.3 Registered Office and Principal Office of Partnership; Addresses of
Partners.

                  (a) The registered office of the Partnership in the State of
         Delaware shall be 1013 Centre Road, Wilmington, DE 19805, and the
         registered agent for service of process on the Partnership at such
         registered office shall be Corporation Service Partnership, 1013 Centre
         Road, Wilmington, DE 19805. The principal place of business of the
         Partnership shall be at 2515 McKinney Ave., LB 30, Suite 1200, Dallas,
         Texas 75201, or such other location as determined by the Management
         Committee. The Partnership may also maintain offices at such additional
         locations as the Management Committee deems advisable.

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                  (b) The addresses of the Partners as of the Closing Date are
         set forth in Section 14.1. The address of a Partner may be changed in
         accordance with the requirements set forth in Section 14.1.

         1.4 Term. The existence of the Partnership commenced on the
Commencement Date, and the Partnership shall continue in existence until the
dissolution of the Partnership pursuant to the express provisions of Article XII
hereof (other than a dissolution that is followed by the reconstitution of the
Partnership pursuant to Section 12.2).

         1.5 Assumed Name Certificate. The Partners shall execute and file any
assumed or fictitious name certificate or certificates or any similar documents
required by law to be filed in connection with the formation and operation of
the Partnership.

         1.6 Ownership. The interest of each Partner in the Partnership shall be
personal property for all purposes. All property and interests in property, real
or personal, owned by the Partnership shall be deemed owned by the Partnership
as an entity, and no Partner, individually, shall have any ownership of such
property or interest except by having an ownership interest in the Partnership
as a Partner. Each of the Partners irrevocably waives, during the term of the
Partnership and during any period of its liquidation following any dissolution,
any right that it may have to maintain any action for partition with respect to
any of the assets of the Partnership.

         1.7 No Individual Authority. No Partner, acting alone, shall have any
authority to act for, or to undertake or assume, any obligation, debt, duty or
responsibility on behalf of any other Partner or the Partnership except as
otherwise expressly provided in this Agreement.

         1.8 Title to Partnership Property. It is the desire and intention of
the Partners that legal title to all property of the Partnership shall be held
and conveyed in the name of the Partnership.

         1.9 Limits of Partnership. The relationship between the parties hereto
shall be limited to the carrying on of the business of the Partnership in
accordance with the terms of this Agreement. Such relationship shall be
construed and deemed to be a limited partnership for the sole and limited
purpose of carrying on such business. Except as otherwise provided for or
contemplated in this Agreement, nothing herein shall be construed to create a
partnership between the Partners or to authorize any Partner to act as general
agent for any other Partner.

                                   ARTICLE II

                                   DEFINITIONS

         The following definitions shall for all purposes, unless otherwise
clearly indicated to the contrary, apply to the terms used in this Agreement.

         "Adjusted Capital Account" means, with respect to any Partner, a
special account maintained for such Partner, the balance of which shall equal
such Partner's Capital Account

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balance, increased by the amount (if any) of such Partner's share of the
Partnership Minimum Gain and Partner Minimum Gain of the Partnership.

         "Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:

                  (a) Credit to such Capital Account any amounts which such
         Partner is obligated to restore pursuant to any provision of this
         Agreement or is deemed to be obligated to restore pursuant to
         Regulations Section 1.704-1(b)(2)(iv)(c), the penultimate sentence of
         Regulations Section 1.704-2(g)(1), or the penultimate sentence of
         Regulations Section 1.704-2(i)(5); and

                  (b) Debit to such Capital Account the items described in
         Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6).

The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.

         "Affiliate" means, with respect to a particular Person, any other
Person directly or indirectly Controlling, Controlled by, or under common
Control with such Person.

         "Agreement" means this Limited Partnership Agreement of Suiza Fluid
Dairy Group, L.P., as it may be further amended, supplemented or restated from
time to time in accordance with the terms of this Agreement.

         "Available Cash" of the Partnership as of any date means all cash funds
of the Partnership on hand as of such date after: (a) payment of all
expenditures of any kind, including operating expenses and capital expenditures,
that are due and payable as of such date or that are expected to become due and
payable in the next 30 days; and (b) provision for adequate reserves (working
capital and capital), with the amount of such reserves to be determined by the
Management Committee (acting reasonably and in good faith).

         "Book Depreciation" has the meaning set forth in Section 4.4(b)(v).

         "Book Value" has the meaning set forth in Section 4.4(c).

         "Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States shall
not be regarded as a Business Day.

         "Capital Account" means the capital account maintained for a Partner
pursuant to Section 4.4.

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         "Capital Contribution" means, with respect to any Partner, the amount
of money and the initial Book Value of any property (other than money)
contributed to the Partnership with respect to the interest in the Partnership
held by such Partner, reduced by the amount of any liabilities of the Partner
assumed by the Partnership or which are secured by any property contributed by
such Partner to the Partnership.

         "Capital Transaction" means any transaction in which the Partnership
(a) sells, assigns or otherwise conveys one or more of its Dairy Operations, or
(b) refinances all, substantially all or a material portion of the Partnership's
debt which is secured by assets of the Partnership.

         "Certificate" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of Delaware, as it may be amended
or restated from time to time.

         "Closing Date" means the date of this Agreement.

         "Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. All references herein to the Code shall include any
corresponding provision or provisions of succeeding law.

         "Commencement Date" means the date that the Certificate of Limited
Partnership was filed with the Secretary of State of Delaware.

         "Contribution Agreement" means the Contribution Agreement, Plan of
Merger, and Purchase Agreement dated as of September 20, 1999, by and among
Suiza Foods, Suiza SoCal Holdings, Inc., a Nevada corporation, Suiza GTL
Holdings, Inc., a Delaware corporation, LOS Holdings, Inc., a Delaware
Corporation, SFDG Holdings, Suiza Management Corporation, a Delaware
corporation, Suiza GP, the Suiza Companies, Suiza GTL, Suiza SoCal, Robinson
Dairy, DFA, DFA Investment, SFG, SFG Management, SFG Capital, the Partnership,
Pete Schenkel, and, for the limited purposes indicated on the signature pages
thereto, Mid-Am.

         "Contributions" means the Contributions, as defined in the Contribution
Agreement.

         "Control" (and derivations thereof) means, with respect to a particular
Person, the ownership, directly or indirectly, of more than 50% of the equity or
voting interests in such Person.

         "Dairy Operation" means any fluid milk processing operation, other than
any fluid milk processing operation where the primary product or products in
terms of sales or production is UHT milk or any other ultra pasteurized or
extended shelf-life fluid milk product, or bottled water operation located in
the Territory.

         "Default Rate" means a per annum interest rate equal to the lesser of:
(a) ten percent (10%) per annum, compounded annually; and (b) the maximum rate
of interest permitted to be charged by applicable law.

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         "Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del. C. Sections 17-101, et seq., as amended from time to time.

         "DFA" means Dairy Farmers of America, Inc., a Kansas cooperative
marketing association.

         "DFA Companies" means SFG, SFG Management and SFG Capital.

         "DFA Interests" has the meaning set forth in Section 11.9 hereof.

         "DFA Investment" means DFA Investment Company, a Kansas cooperative
marketing association.

         "DFA Manager" means the member of the Management Committee designated
by DFA pursuant to Section 7.1.

         "DFA Parents" means DFA, DFA Investment and Mid-Am.

         "DFA Partners" means DFA, Mid-Am and any assignees or transferees of
their Partner Interests, to the extent each holds any Partner Interest in the
Partnership. Any right or power granted to DFA or the DFA Partners may be
exercised by DFA or, if DFA no longer owns any Partner Interests, then by any
group of DFA Partners holding a majority of the Percentage Interests held by all
DFA Persons.

         "DFA Price" means, as of any date, the sum of (a) the aggregate
Preferred Returns plus the aggregate Preferred Capital Balance for all DFA
Partners, plus (b) the aggregate Formula Value of the DFA Partners.

         "DFA Veto" means any occasion on which the Management Committee fails
to approve a Major Decision proposed by Suiza due solely to a vote (or failure
to vote) by the DFA Manager.

         "Dissolution Event" has the meaning set forth in Section 12.1(b).

         "EBITDA" means, for any period, the sum, for the Partnership and its
subsidiaries on a consolidated basis, without duplication in accordance with
generally accepted accounting principles of the following: (a) Net Income, plus
(b) income taxes, interest expense, depreciation and amortization, to the extent
deducted in calculating Net Income, plus (c) any Unusual Items of loss included
in calculating Net Income, minus (d) any Unusual Items of income included in
calculating Net Income.

         "Event of Bankruptcy" means, with respect to any Partner or the
Partnership, any of the following acts or events:

                  (a) making an assignment for the benefit of creditors;

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                  (b) filing a voluntary petition in bankruptcy;

                  (c) becoming the subject of an order for relief or being
         declared insolvent or bankrupt in any federal or state bankruptcy or
         insolvency proceeding;

                  (d) filing a petition or answer seeking a reorganization,
         arrangement, composition, readjustment, liquidation, dissolution, or
         similar relief under any statute, law, or regulations;

                  (e) filing an answer or other pleading admitting or failing to
         contest the material allegations of a petition filed against it in a
         proceeding of the type described in parts (a) through (d) of the
         definition;

                  (f) seeking, consenting to, or acquiescing in the appointment
         of a trustee, receiver, or liquidator of all or any substantial part of
         its properties; or

                  (g) the expiration of 90 days after the date of the
         commencement of a proceeding against such Person seeking
         reorganization, arrangement, composition, readjustment, liquidation,
         dissolution, or similar relief under any statute, law, or regulation if
         the proceeding has not been previously dismissed or the expiration of
         60 days after the date of the appointment, without such Person's
         consent or acquiescence, of a trustee or receiver for the liquidation
         of such Person or of all or any substantial part of such Person's
         properties, if the appointment has not been previously vacated or
         stayed, or the expiration of 60 days after the date of expiration of a
         stay, if the appointment has not been previously vacated.

         "Fiscal Year" means the 12-month period ending December 31 of each
year; provided that the initial Fiscal Year shall be the period beginning on the
Commencement Date and ending December 31, 1999, and the last Fiscal Year shall
be the period beginning on January 1 of the calendar year in which the final
liquidation and termination of the Partnership is completed and ending on the
date such final liquidation and termination is completed (to the extent any
computation or other provision hereof provides for an action to be taken on a
Fiscal Year basis, an appropriate proration or other adjustment shall be made in
respect of the initial and final Fiscal Years to reflect that such periods are
less than full calendar year periods).

         "Formula Value" for a particular Partner as of a particular date means
(a) the Percentage Interest of such Partner, multiplied by (b) the sum of (i)
7.5 times the EBITDA of the Partnership over the 12 full calendar months
immediately preceding such date, minus (ii) any indebtedness for borrowed money
of the Partnership, including the Preferred Interests, as of such date;
provided, that the Formula Value shall not be less than the average annual
EBITDA computed over the 24 months preceding the date of determination.

         "Indemnitee" has the meaning set forth in Section 7.10.

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         "Independent Accountants" means any of the five largest nationally
recognized accounting firms in the United States, as selected by the Management
Committee. Deloitte & Touche LLP shall be the initial Independent Accountant.

         "Limited Partner" means SFDG Holdings, DFA, Mid-Am, and any other
Person who is admitted as a Limited Partner in the Partnership on and after the
Closing Date and whose admission has been reflected on the books and records of
the Partnership.

         "Liquidator" has the meaning set forth in Section 14.3.

         "Losses" has the meaning set forth in Section 4.4(b).

         "Major Decision" has the meaning set forth in Section 7.2.

         "Management Committee" means the management committee of the General
Partner, whose members will be designated by Suiza and DFA in accordance with
Section 7.1 hereof.

         "Mergers" means the Mergers, as defined in the Contribution Agreement,
pursuant to which the Suiza Companies will be merged into the Partnership or
into one or more limited liability companies owned, directly or indirectly, by
the Partnership.

         "Mid-Am" means Mid-Am Capital, L.L.C., a Delaware limited liability
company.

         "Net Income" of a Person means the net income of such Person,
determined in accordance with generally accepted accounting principles, applied
in a manner consistent with the manner in which Suiza Foods (or its successor)
calculates its consolidated net income at such time.

         "Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.

         "Partner" means SFDG Holdings, DFA, Mid-Am, and any other Person who is
admitted as a Partner in the Partnership on and after the Closing Date and whose
admission has been reflected on the books and records of the Partnership.

         "Partner Interest" means the interest of a Partner in the Partnership,
including, without limitation, such Partner's right: (a) to a distributive share
of the Profits, Losses, and other items of income, gain, loss, deduction, and
credit of the Partnership; (b) to a distributive share of the assets of the
Partnership; and (c) with respect to certain Partners, to participate in the
management and operation of the Partnership as provided in this Agreement.

         "Partner Minimum Gain" shall mean partner nonrecourse debt minimum gain
as determined under the rules of Regulations Section 1.704-2(i).

         "Partner Nonrecourse Deduction" has the meaning set forth in
Regulations Section 1.704-2(i)(1) and (2).

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         "Partnership" means Suiza Fluid Dairy Group, L.P., a Delaware limited
partnership established by filing of the Certificate with the Secretary of State
of Delaware.

         "Partnership Estimated Net Taxable Income" has the meaning set forth in
Section 6.4(a).

         "Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(d).

         "Percentage Interest" means the percentage interest of a Regular
Partner in certain allocations of Profits, Losses, and other items of income,
gain, loss, or deduction and certain distributions of cash and property. The
initial Percentage Interest of each Regular Partner is set forth below:

<TABLE>
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               REGULAR PARTNER                     INITIAL PERCENTAGE INTEREST

           -----------------------------------------------------------------------
<S>                                                <C>
                SFDG Holdings                                   66.1%
           -----------------------------------------------------------------------
                     DFA                                        33.8%
           -----------------------------------------------------------------------
               Suiza Management                                  0.1%
           -----------------------------------------------------------------------
                    TOTAL                                      100.0%
           -----------------------------------------------------------------------
</TABLE>

         The Percentage Interest of a Regular Partner may be adjusted pursuant
to Section 4.3 hereof. After such adjustment, the Percentage Interest of such
Regular Partner, as adjusted, shall constitute such Regular Partner's Percentage
Interest for all purposes under this Agreement. Neither Mid-Am nor Suiza
Preferred Partner shall have a Percentage Interest.

         "Person" means an individual, corporation, partnership, limited
liability company, trust, estate, unincorporated organization, association, or
other entity.

         "Preferred Capital Balance" means: (a) with respect to Suiza Preferred
Partner, the excess of (i) $176,272,000 plus the amount of the Preferred Capital
Balance of any additional Partner Interests issued to Suiza Preferred Partner
pursuant to Section 4.3(a), over (ii) total Preferred Capital Balance
Distributions to Suiza Preferred Partner since the Closing Date; and (b) with
respect to Mid-Am, the excess of (i) $90,000,000, over (ii) total Preferred
Capital Balance Distributions to Mid-Am since the Closing Date.

         "Preferred Capital Balance Distribution" means any distribution of cash
to the Priority Partners which reduces their respective Preferred Capital
Balances. Each Preferred Capital Balance Distribution shall (a) be made to the
Priority Partners in proportion to their Preferred Capital Balances, and (b) be
identified by the Managers as a Preferred Capital Balance Distribution and not a
distribution under Section 6.1(a) or (b) hereof. With the approval of the
Management Committee in accordance with the provisions of Section 7.3 hereof, a
Preferred Capital Balance Distribution may be made at any time.

         "Preferred Return" means, with respect to a particular Priority
Partner, an aggregate amount, computed like simple interest, compounded
annually, at a rate equal to 10% per annum

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<PAGE>   13

on such Priority Partner's Preferred Capital Balance, or as contemplated by
Section 4.3(a), reduced by distributions made to such Priority Partner pursuant
to Section 6.1(a) below.

         "Priority Partner" means Suiza Preferred Partner and Mid-Am, and any
permitted successors and assigns thereof.

         "Profits" has the meaning set forth in Section 4.4(b).

         "Regular Partner" means the Suiza Regular Partners, DFA, and any other
Partner with a Percentage Interest greater than zero that may be admitted to the
Company in accordance with this Agreement.

         "Regulations" means the Treasury Regulations promulgated under the
Code, as amended and in effect (including corresponding provisions of any
succeeding regulations).

         "Regulatory Allocations" has the meaning set forth in Section 5.3.

         "Robinson Dairy" means Robinson Dairy, Inc., a Colorado corporation.

         "Settlement Notice" has the meaning set forth in Section 7.10(c).

         "Schenkel" means Pete Schenkel.

         "SFG" means Southern Foods Group, L.P., a Delaware limited partnership.

         "SFG Management" means SFG Management Limited Liability Company, a
Delaware limited liability company.

         "SFG Capital" means SFG Capital Corporation, a Delaware corporation.

         "Suiza" means Suiza Management and any assignees or transferees of its
Partner Interests, to the extent each holds any Partner Interest in the
Partnership. Any right or power granted to Suiza Management or Suiza may be
exercised by Suiza Management or, if Suiza Management no longer owns any Partner
Interests, then by any Persons included within the foregoing definition of
"Suiza" holding a majority of the Percentage Interests held by all Persons
included within such definition.

         "SFDG Holdings" means Suiza Fluid Dairy Group Holdings, Inc., a Nevada
corporation.

         "Suiza Common Stock" means the common stock, $.01 par value per share,
of Suiza Foods, or any securities issued in exchange for or in substitution of
such common stock in connection with any merger, consolidation, recapitalization
or similar event.

         "Suiza Companies" means the following companies and any additional
dairy operations contributed by the Suiza Parents pursuant to the Contribution
Agreement: Broughton Foods

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Company, an Ohio corporation; Burger Dairy Company, an Indiana corporation;
CFI-TMP, Inc., a Michigan corporation; Country Delite Farms, Inc., a Delaware
corporation; Country Fresh, Inc., a Michigan corporation; Country Fresh Wesley,
Inc., a Michigan corporation; Dairy Fresh, Inc., a Delaware corporation; Dairy
Products of Michigan, Inc., a Michigan corporation; East Coast Ice Cream, LLC, a
Michigan limited liability company; Frostbite Brands, Inc., a Michigan
corporation; Land-O-Sun Dairies, LLC, a Delaware limited liability company, LFD
Holding Company, a Delaware corporation; London Farms Dairy, Inc., a Delaware
corporation; Louis Trauth Dairy, Inc., a Delaware corporation; Model Dairy,
Inc., a Delaware corporation; Northern Falls Water Company, Inc., a Delaware
corporation; Oberlin Farms Dairy, Inc., an Ohio corporation; Southeastern Juice
Packers, Inc., a Michigan corporation; and Velda Farms, Inc., a Delaware
corporation.

         "Suiza Foods" means Suiza Foods Corporation, a Delaware corporation.

         "Suiza GP" means Suiza Fluid Dairy Group GP, LLC, a Delaware limited
liability company.

         "Suiza GTL" means Suiza GTL, LLC, a Delaware limited liability company.

         "Suiza Managers" means the members of the Management Committee
designated by Suiza pursuant to Section 7.1.

         "Suiza Parents" means Suiza Foods, Suiza SoCal Holdings, Inc., a Nevada
corporation, Suiza GTL Holdings, Inc., a Delaware corporation, LOS Holdings,
Inc., a Delaware Corporation, and SFDG Holdings.

         "Suiza Preferred Partner" means SFDG Holdings as the holder of a
Preferred Capital Balance and as the owner of rights to distributions in respect
thereof under Section 6.1(a), and allocations of Profits and Losses in
connection therewith.

         "Suiza Regular Partners" means Suiza Management and SFDG Holdings as
the holders of Percentage Interests greater than zero and as the owner of rights
to distributions under Section 6.1(b) hereof, and allocations of Profits and
Losses in connection therewith.

         "Suiza SoCal" means Suiza SoCal, LLC, a Delaware limited liability
company.

          "Tax Matters Partner" has the meaning set forth in Section 11.1.

         "Territory" means the continental United States, Alaska and Hawaii.

         "Territory Dairy Investment" means any acquisition after the Closing
Date of a Dairy Operation located in the Territory, whether through asset
purchase, stock purchase, merger or otherwise.

                                       10
<PAGE>   15

         "Unusual Items" of income or loss mean any extraordinary items of
income or loss, any nonoperating gains or losses resulting from the sale of
assets, any merger or acquisition expenses and any restructuring charges.

                                   ARTICLE III

                                     PURPOSE

         3.1 Purposes and Scope. Subject to the provisions of this Agreement,
the purposes of the Partnership are to:

                  (a) acquire (i) the operations of the DFA Companies, the Suiza
         Companies, Suiza GTL, Suiza SoCal and Robinson Dairy through the
         Mergers and the Contributions and (ii) such other assets and
         liabilities as are contemplated to be acquired by the Partnership
         pursuant to the terms of the Contribution Agreement;

                  (b) own, operate, manage, maintain, improve, develop,
         purchase, sell, exchange, and otherwise acquire or dispose of Dairy
         Operations in the Territory;

                  (c) borrow money in furtherance of any or all of the
         objectives of the Partnership business, and to secure the same by
         mortgage, pledge, or other liens; and

                  (d) do any and all other acts or things which may be
         incidental or necessary to carry on the business of the Partnership as
         herein contemplated. The Partnership shall not engage in any other
         business or activity not intended to implement the foregoing without
         the prior written consent of the Management Committee.

                                   ARTICLE IV

                              CAPITAL CONTRIBUTIONS

         4.1 Initial Capital Contributions. Prior to the date of this Agreement,
the Suiza Parents owned, directly or indirectly, all of the outstanding equity
interests in each of the Suiza Companies (except Land-O-Sun Dairies, LLC) and
Robinson Dairy, 75% of the outstanding common member interests and $120 million
aggregate stated amount of preferred member interests in Suiza GTL, 75% of the
outstanding common member interests and $95 million aggregate stated amount of
preferred member interests in Suiza SoCal, and, together with DFA Investment,
all of the outstanding equity interests in Land-O-Sun Dairies, LLC. Prior to the
date of this Agreement, the DFA Parents owned, directly or indirectly, all of
the outstanding limited partner interests in the Partnership, 25% of the
outstanding common member interests and $40 million aggregate stated amount of
preferred member interests in Suiza GTL, 25% of the outstanding common member
interests and $21 million aggregate stated amount of preferred member interests
in Suiza SoCal, and $20 million stated amount of preferred interests in
Land-O-Sun Dairies, LLC. Prior to the date of this Agreement, Suiza Management
has been the sole general partner of the Partnership. The DFA Parents and
Schenkel own, directly or indirectly, all

                                       11
<PAGE>   16

of the outstanding equity interests in SFG, SFG Management and SFG Capital.
Pursuant to the Contribution Agreement, (i) the Partnership purchased from
Schenkel the entire equity interests in SFG held by Schenkel for the sum of $99
million in cash; (ii) Suiza Management purchased from Schenkel all of the member
interests in SFG Management owned by Schenkel for the sum of $1 million in cash;
(iii) DFA contributed its member interest in SFG Management to the Partnership;
(iv) the DFA Parents contributed, or caused the contribution of, their equity
interests in SFG, their membership interests in Suiza GTL and in Suiza SoCal,
the SFG Subordinated Notes held by them, and their preferred interests in
Land-O-Sun Dairies, LLC to the Partnership in exchange for common and preferred
limited partner interests in the Partnership; (v) the Suiza Parents contributed
or merged the Suiza Companies and Robinson Dairy into, and contributed their
membership interests in Suiza GTL and Suiza SoCal to, the Partnership in
exchange for common and preferred limited partner interests in the Partnership;
(vi) Suiza Management contributed 90% of the member interests in SFG Management
it purchased from Schenkel to the Partnership in respect of its .1% general
partner interest in the Partnership; and (vii) DFA made an additional cash
contribution to, or Suiza Foods received an additional cash distribution from, a
loan from, or additional preferred interests in, the Partnership in respect of
certain additional fluid dairy operations contributed by the Suiza Parents as
contemplated therein, including, without limitation, the operations of Robinson
Dairy. The Partners hereby agree that they will take all reasonable steps to
determine each Partner's Capital Account as of the Closing Date within 30 days
after the Closing Date; provided that it is hereby agreed that (a) Mid-Am's
Capital Account as of the Closing Date shall be equal to $90 million, (b) Suiza
Preferred Partner's Capital Account as of the Closing Date shall be equal to
$176.272 million, and (c) SFDG Holdings' Capital Account plus Suiza Management's
Capital Account as of the Closing Date shall be equal to .662 times, and DFA's
Capital Account as of the Closing shall be equal to .338 times, the aggregate
Capital Accounts of all of the Partners.

         4.2 Non-Contemplated Contributions.

                  (a) If the Management Committee approves (in accordance with
         the Major Decision provisions of Section 7.3) any additional Capital
         Contributions beyond those described in Section 4.1, the Partnership
         shall deliver a written notice to all of the Partners (although only
         Partners shall be required to make, and can make, such additional
         Capital Contributions) (a "Contribution Notice") requesting such
         additional Capital Contributions. Each Contribution Notice shall
         specify the following information:

                           (i) the aggregate amount of Capital Contributions
                  requested in the Contribution Notice;

                           (ii) the amount of additional cash funds each Partner
                  is required to contribute to the Partnership (which Capital
                  Contributions shall be made by the Partners in proportion to
                  their Percentage Interests);

                           (iii) the date on which such additional Capital
                  Contributions are due, which date shall be approved in advance
                  by the Management Committee; and

                                       12
<PAGE>   17

                           (iv) wiring or other instructions for the bank
                  account into which the required Capital Contribution is to be
                  deposited.

                  (b) Any Capital Contributions made pursuant to Section 4.2(a)
         shall be spent by the Partnership in accordance with the general
         directions of the Management Committee, as approved in connection with
         the approval of such Capital Contributions.

                  (c) Except as provided in Sections 4.1 and 4.3 hereof and in
         the foregoing provisions of this Section 4.2, no Partner shall be
         required to make any Capital Contribution.

         4.3 New Investment Contributions.

                  (a) If the Management Committee decides to make a Territory
         Dairy Investment and determines that it is desirable to purchase the
         target business (i) in a qualified stock purchase (within the meaning
         of Section 338 of the Code) followed by a Section 338(h)(10) election,
         (ii) in a transaction taxed as taxable purchase of the target's stock,
         or (iii) in a transaction qualifying as a reorganization under Section
         368 of the Code, Suiza Foods shall carry out the purchase and shall
         transfer the assets and liabilities of the acquired business to the
         Partnership. If the acquisition is effected by a transaction as to
         which a Section 338(h)(10) election is made, the Partnership shall loan
         the purchase price (including the related acquisition costs and
         expenses recorded as purchase price) to Suiza Foods, and the transfer
         of the assets and liabilities of the acquired business shall constitute
         repayment of the loan that funded the acquisition. If the acquisition
         is effected by a transaction taxed as a taxable purchase of the
         target's stock, the Partnership shall loan the purchase price
         (including the related acquisition costs and expenses recorded as
         purchase price) to Suiza Foods, and Suiza Foods shall transfer the
         assets and liabilities of the acquired business in exchange for a
         preferred Partner Interest with a Preferred Capital Balance equal to
         the amount of the loan and a Preferred Return equal to the interest
         rate on the loan from the Partnership to Suiza Foods. If the
         acquisition is effected by a transaction qualifying as a reorganization
         under Section 368 of the Code, Suiza Foods, through SFDG Holdings,
         shall transfer the assets and liabilities of the acquired business to
         the Partnership as a capital contribution. In such event, DFA shall
         elect (i) whether to contribute to the Partnership an amount of cash
         equal to DFA's Percentage Interest multiplied by the value (determined
         using the closing trading price on the date issued) of the Suiza Common
         Stock transferred to the stockholders of the acquired corporation, plus
         the related acquisition costs and expenses recorded as purchase price,
         and divided by the SFDG Holdings' Percentage Interests, or (ii)
         whether, with the mutual agreement of the Partners, the Partnership
         shall loan the purchase price (including the related acquisition costs
         and expenses recorded as purchase price) to Suiza Foods, and Suiza
         Foods shall transfer the assets and liabilities of the acquired
         business in exchange for a preferred Partner Interest with a Preferred
         Capital Balance equal to the amount of the loan and a Preferred Return
         equal to the interest rate on the loan from the Partnership to Suiza
         Foods. If DFA elects not to contribute such amount of cash and the
         Partnership does not make a loan to Suiza Foods in exchange for such
         additional preferred Partner Interest,

                                       13
<PAGE>   18

         SFDG Holdings' Percentage Interest shall be increased to equal the
         quotient (expressed as a percentage) of (i) the Formula Value for SFDG
         Holdings immediately prior to the acquisition, plus the value
         (determined using the closing trading price on the date issued) of the
         Suiza Common Stock transferred to the stockholders of the acquired
         corporation, plus the related cash purchase price, if any, acquisition
         costs and expenses recorded as purchase price, divided by (ii) the
         total Formula Value for all Partners immediately prior to the
         Partnership's participation in the relevant Territory Dairy Investment,
         plus the value (determined using the closing trading price on the date
         issued) of the Suiza Common Stock transferred to the stockholders of
         the acquired corporation, plus the related cash purchase price, if any,
         acquisition costs and expenses recorded as purchase price, and DFA's
         Percentage Interest shall be correspondingly reduced.

                  (b) Notwithstanding any provision in this Agreement to the
         contrary, if Suiza desires for the Partnership to participate in a
         Territory Dairy Investment and the Management Committee rejects such
         Territory Dairy Investment due solely to a DFA Veto, then, in addition
         to any other options available to Suiza as a result of such DFA Veto
         (i.e., its rights under Sections 7.7(b)(iii) and 11.9), Suiza may, in
         its sole discretion, cause the Partnership to participate in such
         Territory Dairy Investment if Suiza (and any other Partners who agree
         to participate) make any and all Capital Contributions necessary to
         enable the Partnership to participate in such Territory Dairy
         Investment (a "New Investment Contribution") (which New Investment
         Contribution shall be treated as being made by SFDG Holdings). Each
         time SFDG Holdings (and any other Partners) makes a New Investment
         Contribution, the Percentage Interest of each Partner shall be adjusted
         to equal the quotient (expressed as a percentage) of (i) the Formula
         Value for such Partner immediately prior to the Partnership's
         participation in the relevant Territory Dairy Investment, plus the
         amount of the New Investment Contributions (if any) made by such
         Partner with respect to the relevant Territory Dairy Investment,
         divided by (ii) the total Formula Value for all Partners immediately
         prior to the Partnership's participation in the relevant Territory
         Dairy Investment, plus the total amount of the total New Investment
         Contributions made by all Partners with respect to the relevant
         Territory Dairy Investment.

         4.4 Capital Accounts.

                  (a) Maintenance Rules. The Partnership shall maintain for each
         Partner a separate Capital Account in accordance with this Section 4.4,
         which shall control the division of assets upon liquidation of the
         Partnership as provided in Section 12.3. The Capital Account shall be
         maintained in accordance with the following provisions:

                           (i) Such Capital Account shall be increased by the
                  cash amount or Book Value of any property contributed by such
                  Partner to the Partnership pursuant to this Agreement, such
                  Partner's allocable share of Profits and any items in the
                  nature of income or gain which are specially allocated to such
                  Partner pursuant to Section 5.2 or Section 5.3 hereof, and the
                  amount of any Partnership

                                       14
<PAGE>   19

                  liabilities assumed by such Partner or which are secured by
                  any property distributed to such Partner.

                           (ii) Such Capital Account shall be decreased by the
                  cash amount or Book Value of any property distributed to such
                  Partner pursuant to this Agreement, such Partner's allocable
                  share of Losses and any items in the nature of deductions or
                  losses which are specially allocated to such Partner pursuant
                  to Section 5.2 or Section 5.3 hereof, and the amount of any
                  liabilities of the Partner assumed by the Partnership or which
                  are secured by any property contributed by such Partner to the
                  Partnership.

                           (iii) In the event all or a portion of an interest in
                  the Partnership is transferred in accordance with the terms of
                  this Agreement, the transferee shall succeed to the Capital
                  Account of the transferor to the extent it relates to the
                  transferred interest; provided, however, that if the transfer
                  causes a termination of the Partnership under Section
                  708(b)(1)(B) of the Code, then the Partnership shall be deemed
                  to have contributed its assets to a new limited partnership in
                  exchange for interests in the new limited partnership,
                  followed by a distribution of the interests in the new limited
                  partnership to the Partnership and liquidation of the
                  Partnership. Such deemed liquidation and reconstitution shall
                  not cause the Partnership to be dissolved or reconstituted for
                  purposes other than maintenance of the Capital Accounts and
                  federal income tax, unless otherwise provided in Article XII.

         The foregoing provisions and the other provisions of this Agreement
         relating to the maintenance of Capital Accounts generally are intended
         to comply with Section 1.704-1(b) of the Regulations and shall be
         interpreted and applied in a manner consistent with such Regulations.
         If the Management Committee reasonably determines that it is prudent to
         modify the manner in which the Capital Accounts, or any increases or
         decreases to the Capital Accounts, are computed in order to comply with
         such Regulations, the Management Committee may authorize such
         modifications, provided that it does not have any effect on the amounts
         distributable to any Person pursuant to Section 12.3 hereof upon the
         dissolution of the Partnership.

                  (b) Definition of Profits and Losses. "Profits" and "Losses"
         mean, for each Fiscal Year or other period, an amount equal to the
         Partnership's taxable income or loss for such year or period,
         determined in accordance with Code Section 703(a) (for this purpose,
         all items of income, gain, loss or deduction required to be stated
         separately pursuant to Code Section 703(a)(1) shall be included in
         taxable income or loss), with the following adjustments:

                           (i) Income of the Partnership that is exempt from
                  federal income tax and not otherwise taken into account in
                  computing Profits and Losses pursuant to this Section 4.4(b)
                  shall be added to such taxable income or loss;

                                       15
<PAGE>   20

                           (ii) Any expenditures of the Partnership described in
                  Code Section 705(a)(2)(B), or treated as Code Section
                  705(a)(2)(B) expenditures pursuant to Regulations Section
                  1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
                  computing Profits and Losses pursuant to this Section 4.4(b)
                  shall be subtracted from such taxable income or loss;

                           (iii) In the event the Book Value of any Partnership
                  asset is adjusted pursuant to Section 4.4(c)(ii) or Section
                  4.4(c)(iii), the amount of such adjustment shall be taken into
                  account as gain or loss from the disposition of such asset for
                  purposes of computing Profits and Losses;

                           (iv) Gain or loss resulting from any disposition of
                  property with respect to which gain or loss is recognized for
                  federal income tax purposes shall be computed by reference to
                  the Book Value of the property disposed of, notwithstanding
                  that the adjusted tax basis of such property differs from its
                  Book Value;

                           (v) In lieu of the deduction for depreciation, cost
                  recovery or amortization taken into account in computing such
                  taxable income or loss, there shall be taken into account
                  "Book Depreciation" as defined in this Section 4.4(b)(v).
                  "Book Depreciation" for any asset means for any Fiscal Year or
                  other period an amount that bears the same ratio to the Book
                  Value of that asset at the beginning of such Fiscal Year or
                  other period as the federal income tax depreciation,
                  amortization or other cost recovery deduction allowable for
                  that asset for such year or other period bears to the adjusted
                  tax basis of that asset at the beginning of such year or other
                  period. If the federal income tax depreciation, amortization,
                  or other cost recovery deduction allowable for any asset for
                  such year or other period is zero, then Book Depreciation for
                  that asset shall be determined with reference to such
                  beginning Book Value using any reasonable method selected by
                  the Management Committee; and

                           (vi) Notwithstanding any other provision of this
                  Section 4.4(b), any items that are specially allocated
                  pursuant to Section 5.2 or Section 5.3 shall not be taken into
                  account in computing Profits and Losses.

                  (c) Definition of Book Value. "Book Value" means for any asset
         the asset's adjusted basis for federal income tax purposes, except as
         follows:

                           (i) The initial Book Value of any asset contributed
                  by a Partner to the Partnership shall be the gross fair market
                  value of such asset, as determined by the Management
                  Committee.

                           (ii) The Book Values of all Partnership assets shall
                  be adjusted to equal their respective gross fair market
                  values, as determined by the Management Committee, as of the
                  following times: (A) the acquisition of an additional interest

                                       16
<PAGE>   21

                  in the Partnership by any new or existing Partner in exchange
                  for more than a de minimis capital contribution if the
                  Management Committee reasonably determines that such
                  adjustment is necessary or appropriate to reflect the relative
                  economic interests of the Partners in the Partnership; (B) the
                  distribution by the Partnership to a Partner of more than a de
                  minimis amount of Partnership property as consideration for an
                  interest in the Partnership if the Management Committee
                  reasonably determines that such adjustment is necessary or
                  appropriate to reflect the relative economic interests of the
                  Partners in the Partnership; and (C) the liquidation of the
                  Partnership within the meaning of Regulation Section
                  1.704-1(b)(2)(ii)(g);

                           (iii) The Book Value of any Partnership asset
                  distributed to any Partner shall be the gross fair market
                  value of such asset on the date of distribution, as determined
                  by the Management Committee.

                           (iv) The Book Values of Partnership assets shall be
                  increased (or decreased) to reflect any adjustment to the
                  adjusted basis of such assets pursuant to Code Section 734(b)
                  or Code Section 743(b), but only to the extent that such
                  adjustments are taken into account in determining Capital
                  Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)
                  and Section 5.2(d) hereof; provided, however, that Book Values
                  shall not be adjusted pursuant to this Section 4.4(c)(iv) to
                  the extent the Management Committee determines that an
                  adjustment pursuant to Section 4.4(c)(ii) is necessary or
                  appropriate in connection with a transaction that would
                  otherwise result in an adjustment pursuant to this Section
                  4.4(c)(iv).

                           (v) If the Book Value of an asset has been determined
                  or adjusted pursuant to Section 4.4(c)(i), Section 4.4(c)(ii),
                  or Section 4.4(c)(iv) hereof, such Book Value shall thereafter
                  be adjusted by the Book Depreciation taken into account with
                  respect to such asset for purposes of computing Profits and
                  Losses.

         4.5 Interest. Except as otherwise provided in this Agreement, no
interest shall be paid by the Partnership on Capital Contributions or on
balances in Capital Accounts.

         4.6 No Withdrawal. No Partner shall be entitled to withdraw any part of
its Capital Contribution or its Capital Account or to receive any distribution
from the Partnership, except as provided in Articles IV, VI, and XII.

         4.7 Limitation on Capital Contributions and Loans. Except as
specifically provided in this Article IV, Article VIII, or Article XII hereof,
no Partner may contribute capital, loan, or advance money to the Partnership.

                                       17
<PAGE>   22

                                    ARTICLE V

                                   ALLOCATIONS

         5.1 Allocation of Profits, Losses and Certain Deductions.

                  (a) Allocation of Profit Generally. After giving effect to the
         allocations set forth in Section 5.2 and Section 5.3, and after giving
         effect to all distributions of cash or property (other than cash or
         property to be distributed pursuant to Article XII), Profits for any
         Fiscal Year shall be allocated to the Partners in the following manner:

                           (i) First, to each Partner with a negative balance in
                  its Adjusted Capital Account, pro rata in accordance with such
                  negative Adjusted Capital Account balances, until such
                  negative Adjusted Capital Account balances have been
                  eliminated;

                           (ii) Next, to SFDG Holdings and from DFA in an amount
                  equal to (W) DFA's Percentage Interest multiplied by (X) the
                  amount of any income or gain allocated to SFDG Holdings during
                  the Fiscal Year pursuant to Section 5.4 arising out of a
                  Territory Dairy Investment effected by either a transaction
                  taxed as a taxable acquisition of the target corporation's
                  stock or a transaction qualifying as a reorganization under
                  Section 368 of the Code ("COB Acquisition"), plus any loss or
                  deduction allocated to SFDG Holdings pursuant to Section 5.4
                  arising out of a COB Acquisition that has not previously been
                  taken into account in a computation pursuant to this Section
                  5.1(a)(ii), multiplied by (Y) the sum of the highest marginal
                  federal income tax rate applicable to corporations for the
                  Fiscal Year and the highest marginal state income tax rate
                  applicable to Suiza Foods for the Fiscal Year, expressed as a
                  percentage, divided by (Z) one minus the sum of the highest
                  marginal federal income tax rate applicable to corporations
                  for the Fiscal Year and the highest marginal state income tax
                  rate applicable to Suiza Foods for the Fiscal Year, expressed
                  as a percentage.

                           (iii) Next, to each Priority Partner in the minimum
                  amount necessary to cause such Priority Partner's positive
                  Adjusted Capital Account balance to equal the sum of such
                  Priority Partner's (A) Preferred Return plus (B) Preferred
                  Capital Balance, in proportion to such deficiencies;

                           (iv) Next, to the Partners in proportion to their
                  Percentage Interests.

                  (b)      Allocation of Losses.

                           (i) After giving effect to the provisions of Section
                  5.2 and Section 5.3, and subject to the limitation set forth
                  in Section 5.1(b)(ii), Losses for any Fiscal Year shall be
                  allocated to the Partners in the following manner:

                                       18
<PAGE>   23

                                    (A) First, to the Partners until each of
                           their Adjusted Capital Account balances is reduced to
                           zero dollars ($0), in proportion to their Adjusted
                           Capital Account balances;

                                    (B) Next, in the minimum amount necessary to
                           cause each Priority Partner's positive Adjusted
                           Capital Account balance to equal the sum of such
                           Priority Partner's Preferred Return and Preferred
                           Capital Balance, in proportion to the excess of each
                           such Priority Partner's Adjusted Capital Account over
                           the amount of its Preferred Return and Preferred
                           Capital Balance;

                                    (C) Next, to each Priority Partner, in
                           proportion to their positive Adjusted Capital Account
                           balances, until such positive Adjusted Capital
                           Account balances have been eliminated; and

                                    (D) Next, to the Partners in proportion to
                           their Percentage Interests.

                           (ii) Notwithstanding anything to the contrary in
                  Section 5.1(b)(i):

                                    (A) The Losses allocated pursuant to Section
                           5.1(b)(i) hereof to any Partner for any Fiscal Year
                           shall not exceed the maximum amount of Losses that
                           may be allocated to such Partner without causing such
                           Partner to have an Adjusted Capital Account Deficit
                           at the end of such Fiscal Year.

                                    (B) If some but not all of the Partners
                           would have an Adjusted Capital Account Deficit as a
                           consequence of an allocation of Losses pursuant to
                           Section 5.1(b)(i) hereof, the limitations set forth
                           in this Section 5.1(b)(ii) shall be applied by
                           allocating Losses pursuant to this Section 5.1(b)(ii)
                           only to those Partners who would not have an Adjusted
                           Capital Account Deficit as a consequence of receiving
                           such an allocation of Losses (with the allocation of
                           such Losses among such Partners to be determined by
                           the Management Committee, based on the allocation
                           that is most likely to effectuate the distribution
                           priorities set forth in Section 6.1 hereof).

                                    (C) If no Partner may receive an additional
                           allocation of Losses pursuant to Section
                           5.1(b)(ii)(B) above, such additional Losses not
                           allocated pursuant to Section 5.1(b)(ii)(B) shall be
                           allocated solely to the Partners in proportion to
                           their Percentage Interests.

                  (c) Allocation of Certain Deductions. Any deductions allocated
         to the Partnership by SFG that arise out of payment of bond tender
         premiums by SFG with respect to the SFG Subordinated Notes (as defined
         in the Contribution Agreement) shall

                                       19
<PAGE>   24

         be allocated to DFA in an amount equal to the amount of such bond
         tender premium economically borne by DFA pursuant to Section 2.6 of the
         Contribution Agreement.

         5.2 Special Allocations.

                  (a) Minimum Gain Chargeback--Partnership Nonrecourse
         Liabilities. If there is a net decrease in Partnership Minimum Gain
         during any Fiscal Year, certain items of income and gain shall be
         allocated (on a gross basis) to the Partners in the amounts and manner
         described in Regulations Section 1.704-2(f) and (j)(2)(i) and (ii),
         subject to the exemptions set forth in Regulations Section
         1.704-2(f)(2), (3), (4), and (5). This Section 5.2(a) is intended to
         comply with the minimum gain chargeback requirement (set forth in
         Regulations Section 1.704-2(f)) relating to Partnership nonrecourse
         liabilities (as defined in Regulations Section 1.704-2(b)(3)) and shall
         be so interpreted.

                  (b) Minimum Gain Chargeback--Partner Nonrecourse Debt. If
         there is a net decrease in Partner Minimum Gain during any Partnership
         Fiscal Year, certain items of income and gain shall be allocated (on a
         gross basis) as quickly as possible to those Partners who had a share
         of the Partner Minimum Gain (determined pursuant to Regulations Section
         1.704-2(i)(5)) in the amounts and manner described in Regulations
         Section 1.704-2(i)(4), (j)(2)(ii), and (j)(2)(iii). This Section 5.2(b)
         is intended to comply with the minimum gain chargeback requirement (set
         forth in Regulations Section 1.704-2(i)(4)) relating to partner
         nonrecourse debt (as defined in Regulations Section 1.704-2(b)(4)) and
         shall be so interpreted.

                  (c) Qualified Income Offset. If, after applying Section 5.2(a)
         and Section 5.2(b), any Partner has an Adjusted Capital Account
         Deficit, items of Partnership income and gain shall be specially
         allocated (on a gross basis) to each such Partner in an amount and
         manner sufficient to eliminate, to the extent required by the
         Regulations, the Adjusted Capital Account Deficit of such Partner as
         quickly as possible.

                  (d) Optional Basis Adjustments. To the extent an adjustment to
         the adjusted tax basis of any Partnership asset pursuant to Code
         Sections 734(b) or 743(b) is required, pursuant to Regulations Section
         1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
         Accounts, the amount of such adjustment to the Capital Accounts shall
         be treated as an item of gain (if the adjustment increases the basis of
         the asset) or loss (if the adjustment decreases such basis) and such
         gain or loss shall be specially allocated to the Partners in a manner
         consistent with the manner in which their Capital Accounts are required
         to be adjusted pursuant to such Section of the Regulations.

                  (e) Nonrecourse Deductions. Nonrecourse Deductions for any
         Fiscal Year shall be specially allocated among the Partners in
         proportion to their Percentage Interests.

                  (f) Partner Nonrecourse Deductions. Partner nonrecourse
         deductions shall be allocated pursuant to Regulations Section
         1.704-2(b)(4) and (i)(1) to the Partner who bears the economic risk of
         loss with respect to the deductions.

                                       20
<PAGE>   25

                  (g) Special Allocation: Economic Sharing Arrangement.
         Notwithstanding anything to the contrary in this Article V, the
         Partners acknowledge and agree that the manner in which distributions
         are to be made pursuant to Section 6.1 correctly reflects the Partners'
         economic sharing arrangement in the Partnership. To the extent that
         allocations of Profits, Losses, and other items of income, gain, loss,
         and deduction set forth in this Article V (other than this Section
         5.2(g)) could produce an economic sharing arrangement among the
         Partners different than that described in Section 6.1, then the
         Partnership shall specially allocate items of gross income, gain, loss,
         and deduction among the Partners in any manner that may be required to
         cause the allocations of Profits, Losses, and other items of income,
         gain, loss, and deduction described in Article V to be consistent with
         the economic sharing arrangement described in Section 6.1.

         5.3 Curative Allocations. The allocations set forth in Section
5.1(b)(ii) and Section 5.2(a) through Section 5.2(f) hereof (the "Regulatory
Allocations") are intended to comply with certain requirements of the
Regulations. It is the intent of the Partners that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Partnership income, gain, loss, or
deduction pursuant to this Section 5.3. Therefore, notwithstanding any other
provisions of this Article V (other than the Regulatory Allocations), the
Management Committee shall make such offsetting special allocations of
Partnership income, gain, loss, or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each Partner's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations were not part
of the Agreement and all Partnership items were allocated pursuant to Section
5.1(a), Section 5.1(b)(i), and Section 5.2(g) hereof. In exercising its
discretion under this Section 5.3, the Management Committee shall take into
account future Regulatory Allocations under Sections 5.2(a) and 5.2(b) that,
although not yet made, are likely to offset other Regulatory Allocations
previously made under Sections 5.2(e) and 5.2(f).

         5.4 Tax Allocations: Code Section 704(c).

                  (a) In accordance with Code Section 704(c) and the Regulations
         thereunder, income, gain, loss and deduction with respect to any
         property contributed to the capital of the Partnership shall, solely
         for tax purposes, be allocated among the Partners so as to take account
         of any variation between the adjusted basis of such property to the
         Partnership for federal income tax purposes and its initial Book Value
         (computed in accordance with Section 4.4(c)(i) hereof).

                  (b) If the Book Value of any Partnership asset is adjusted
         pursuant to Section 4.4(c)(ii) hereof, subsequent allocations of
         income, gain, loss, and deduction with respect to such asset shall take
         account of any variation between the adjusted basis of such asset for
         federal income tax purposes and its Book Value in the same manner as
         under Code Section 704(c) and the Regulations thereunder.

                                       21
<PAGE>   26

                  (c) Any elections or other decisions relating to such
         allocation shall be made by the Management Committee.

                  (d) Allocations pursuant to this Section 5.4 are solely for
         purposes of federal, state, and local taxes and shall not affect or in
         any way be taken into account in computing any Person's Capital
         Account, Adjusted Capital Account, or share of Profits, Losses, and
         other items or distributions pursuant to any provision of this
         Agreement.

                  (e) It is intended that the allocations in Sections 5.1, 5.2,
         5.3 and 5.4 effect an allocation for federal income tax purposes
         consistent with Section 704 of the Code and comply with any limitations
         or restrictions therein.

         5.5 Other Allocation Rules.

                  (a) For purposes of determining the Profits, Losses, or any
         other item allocable to any period, Profits, Losses, and any such other
         item shall be determined on a daily, monthly, or other basis, as
         determined by the Management Committee using any permissible method
         under Code Section 706 and the Regulations thereunder.

                  (b) For federal income tax purposes, every item of income,
         gain, loss and deduction shall be allocated among the Partners in
         accordance with the allocations under Sections 5.1, 5.2, 5.3, and 5.4.

                  (c) The Partners are aware of the income tax consequences of
         the allocations made by this Article V and hereby agree to be bound by
         the provisions of this Article V in reporting their shares of
         Partnership income and loss for income tax purposes.

                  (d) The Partners agree that the Partners' Percentage Interests
         represent the Partners' respective interests in Partnership profits for
         purposes of allocating excess nonrecourse liabilities (as defined in
         Regulations Section 1.752-3(a)(3)) pursuant to Regulations Section
         1.752-3(a)(3).

                                   ARTICLE VI

                                  DISTRIBUTIONS

         6.1 Distributions of Available Cash. The Management Committee shall
review the Partnership's accounts at the end of each calendar quarter to
determine whether distributions are appropriate. Subject to Sections 17-607 of
the Delaware Act, the Management Committee shall authorize such distributions of
Available Cash as it may determine in its sole discretion; provided, however, to
the extent there is sufficient Available Cash to make distributions under
Section 6.1(a) hereof, such distributions shall be made. All such distributions
of cash shall be made in the manner set forth below:

                                       22
<PAGE>   27

                  (a) First, to SFDG Holdings in an amount equal to (W) DFA's
         Percentage Interest multiplied by (X) the amount of any income or gain
         allocated to SFDG Holdings during the Fiscal Year pursuant to Section
         5.4 arising out of a Territory Dairy Investment effected by either a
         transaction taxed as a taxable acquisition of the target corporation's
         stock or a transaction qualifying as a reorganization under Section 368
         of the Code ("COB Acquisition"), plus any loss or deduction allocated
         to SFDG Holdings pursuant to Section 5.4 arising out of a COB
         Acquisition that has not previously been taken into account in a
         computation pursuant to Section 5.1(a)(ii), multiplied by (Y) the sum
         of the highest marginal federal income tax rate applicable to
         corporations for the Fiscal Year and the highest state income tax
         applicable to Suiza Foods during the Fiscal Year, expressed as a
         percentage, divided by (Z) one minus the sum of the highest marginal
         federal income tax rate applicable to corporations for the Fiscal Year
         and the highest state income tax rate applicable to Suiza Foods during
         the Fiscal Year, expressed as a percentage.

                  (b) First, to each Priority Partner with a Preferred Return,
         in proportion to the Preferred Return of each such Priority Partner, in
         an amount up to the Preferred Return of each such Priority Partner; and

                  (c) Next, to the Partners in proportion to their Percentage
         Interests.

                  (d) Notwithstanding anything to the contrary above, (i) any
         Preferred Capital Account Balance Distribution made by the Partnership
         shall be treated as a distribution by the Partnership in reduction of
         the Priority Partners' Preferred Capital Balances but shall not be made
         or taken into account under clause (a) or (b) above; and (ii) if
         Available Cash is derived from a transaction that occurs in connection
         with the dissolution, termination and liquidation of the Partnership,
         any Available Cash that is derived from or attributable to such a
         transaction shall be distributed to the Partners in accordance with
         Section 12.3 hereof.

         6.2 Amounts Withheld. Notwithstanding any other provision of this
Agreement to the contrary, each Partner hereby authorizes the Partnership to
withhold and to pay over, or otherwise pay, any withholding or other taxes
payable by the Partnership with respect to such Partner as a result of such
Partner's participation in the Partnership. If and to the extent that the
Partnership shall be required to withhold or pay any such taxes, such Partner
shall be deemed for all purposes of this Agreement to have received a payment
from the Partnership as of the time such withholding or tax is paid, which
payment shall be deemed to be a distribution with respect to such Partner's
Partner Interest to the extent that the Partner (or any successor to such
Partner's Partner Interest) is entitled to receive a distribution. Any
withholdings authorized by this Section 6.2 shall be made at the maximum
applicable statutory rate under the applicable tax law unless the Partnership
shall have received an opinion of counsel or other evidence satisfactory to the
Management Committee to the effect that a lower rate is applicable, or that no
withholding is applicable.

         6.3 Excess Distributions. To the extent that the aggregate of actual
and deemed distributions to a Partner under this Article VI for any period
exceeds the distributions to which

                                       23
<PAGE>   28

such Partner is entitled for such period, the amount of such excess shall be
considered a loan from the Partnership to such Partner. Such loan shall bear
interest (which interest shall be treated as an item of income to the
Partnership) at the Default Rate, accruing from and after the date which is ten
(10) days after a Partner, on behalf of the Partnership, makes demand for
repayment of any such excess, and such interest shall accrue until discharged by
such Partner by repayment, which shall be made out of distributions to which
such Partner would otherwise be subsequently entitled if the Partner does not
otherwise repay such loan.

         6.4 Tax Distributions.

                  (a) Notwithstanding anything to the contrary in Section 6.1,
         the Managers shall cause the Partnership from time to time to
         distribute to each Partner an amount equal to the excess of (i) the
         Partnership's Estimated Net Taxable Income (defined below) for the
         applicable Fiscal Year (or portion thereof) to which such distribution
         relates which is allocable to such Partner, multiplied by the maximum
         marginal federal income and the state tax rate applicable to the
         relevant corporation in effect during the Fiscal Year to which such
         distribution relates, over (ii) the sum of distributions already made
         to such Partner during the relevant Fiscal Year. For these purposes,
         "Partnership Estimated Net Taxable Income" means the excess of (Y) the
         estimate of the aggregate amount of items of taxable income and gain of
         the Partnership for the applicable Fiscal Year (or portion thereof) to
         which such distribution relates, over (Z) the estimate of the aggregate
         amount of items of taxable deduction and loss for such Fiscal Year (or
         portion thereof) to which such distribution relates. The Managers shall
         determine the Partnership Estimated Net Taxable Income and each
         Partner's allocable share of Partnership Estimated Net Taxable Income.
         The Partners acknowledge and agree that the sole purpose of this
         Section 6.4(a) is to enable the Partnership to distribute sufficient
         cash to each Partner to permit each Partner to timely satisfy its
         estimated income tax obligations, if any, arising from the Partner's
         allocable share of the Partnership's taxable income. The Manager shall
         make such distributions on or about April 15, June 15, September 15 and
         December 15 of each year and/or on any other date that similarly
         coincides with the due date of any estimated income tax obligation of
         any Partner.

                  (b) Notwithstanding any provision in this Section 6.4 to the
         contrary, no distributions shall be made pursuant to this Section 6.4
         to the extent there is not sufficient Available Cash to make such
         distributions.

                  (c) For purposes of this Agreement, amounts distributed to the
         Partners pursuant to Section 6.4 shall be deemed to be advance
         distributions of amounts to be distributed pursuant to Section 6.1.

         6.5 Payments Not Deemed Distributions. Any amounts paid pursuant to
Section 7.6 shall not be considered distributions for purposes of this
Agreement.

                                       24
<PAGE>   29

                                   ARTICLE VII

                          MANAGEMENT OF THE PARTNERSHIP

         7.1 Management Committee.

                  (a) The Partnership shall be managed by the Management
         Committee of the General Partner, which will consist of three
         individuals (the "Managers"). Two Managers shall be designated by
         Suiza, and one Manager shall be designated by DFA, and the General
         Partner shall cause such persons to be elected to the Management
         Committee. Suiza and DFA shall have the right to designate replacements
         of those Managers designated by them. Each Manager designated by Suiza
         must be a director, officer or employee of Suiza, and each Manager
         designated by DFA must be a director, officer or employee of DFA. The
         initial Suiza Managers shall be Gregg L. Engles and Tracy L. Noll, and
         the initial DFA Manager shall be Gary E. Hanman. Suiza may designate
         one of the Suiza Managers as the Chairman of the Management Committee,
         and such Manager will preside (when present) at all meetings of the
         Management Committee.

                  (b) The limited liability company agreement of the General
         Partner shall be in substantially the form attached hereto as Exhibit
         A.

         7.2 Major Decisions. The term "Major Decision" means any decision by
the Management Committee with respect to any of the following matters:

                  (a) admitting any Person as a Partner of the Partnership;

                  (b) accepting or requiring any Partner to make any additional
         Capital Contribution to the Partnership or otherwise issuing additional
         equity interests in the Partnership except for Capital Contributions
         specified in Section 4.3 of less than $100 million;

                  (c) incurring indebtedness for borrowed money (which expressly
         excludes trade payables incurred in the ordinary course of business) in
         excess of $250 million;

                  (d) selling, leasing, pledging or granting a security interest
         or encumbrance in all or substantially all of the Partnership's assets,
         except in connection with the incurrence of indebtedness for borrowed
         money that does not involve a Major Decision under the preceding
         paragraph;

                  (e) approving an increase in the annual capital expenditure
         budget of $50 million or more over the previous annual capital
         expenditure budget for the Partnership or making any capital
         expenditure, or series of related capital expenditures, in excess of
         $50 million that are not contemplated by a previously approved capital
         expenditure budget;

                                       25
<PAGE>   30

                  (f) acquiring (whether through an asset purchase, merger,
         equity purchase or otherwise) any Dairy Operations or other assets
         (excluding acquisitions of raw materials and supplies in the ordinary
         course of business) having a value, individually or in the aggregate
         for any series of related transactions, in excess of $250 million;

                  (g) selling or otherwise disposing of any Dairy Operations or
         other assets (excluding sales or other dispositions of inventory in the
         ordinary course of business) having a value, individually or in the
         aggregate for any series of related transactions, in excess of $250
         million;

                  (h) consenting to the transfer of a Partner Interest pursuant
         to Section 11.2;

                  (i) except as otherwise permitted in Section 7.6(b) or Section
         7.9, entering into any transaction or agreement between the Partnership
         and a Partner or an Affiliate of a Partner, including any change in the
         percentage used to determine the Management Fee in Section 7.6(b),
         except for loans specified in Section 4.3 of less than $100 million
         between the Partnership and a Partner or an Affiliate of a Partner;

                  (j) making any material election or other decision pursuant to
         Section 5.4(c), which relates to Code Section 704(c);

                  (k) any change in the purpose or scope of the Partnership
         pursuant to Article III;

                  (l) amending or granting a waiver with respect to this
         Agreement;

                  (m) authorizing any consolidation, dissolution, or liquidation
         of the Partnership or any merger in which the Partnership does not
         survive;

                  (n) executing or delivering any assignment for the benefit of
         creditors of the Partnership;

                  (o) filing any voluntary petition in bankruptcy or
         receivership with respect to the Partnership; or

                  (p) making a Preferred Capital Balance Distribution, and the
         amount of any such Preferred Capital Balance Distribution.

         7.3 Approval of Major Decisions. Notwithstanding any contrary
provisions of Section 7.1, the limited liability company agreement of the
General Partner shall provide the following with respect to approval of Major
Decisions:

                  (a) Any Major Decision must be approved by unanimous vote of
         the Managers present and entitled to vote at a meeting of the
         Management Committee at which a quorum is present.

                                       26
<PAGE>   31

                  (b) The Management Committee may not approve any Major
         Decision unless at least one Suiza Manager and one DFA Manager are
         present at the meeting; provided that the Suiza Manager entitled to
         vote may approve any Major Decision at a meeting at which no DFA
         Manager is present if the following provisions have been satisfied with
         respect to such meeting:

                           (i) the notice of such meeting included a statement
                  indicating that a Major Decision would be addressed at such
                  meeting and describing in general terms the nature of such
                  Major Decision; and

                           (ii) if no DFA Manager is present at the originally
                  scheduled meeting, the meeting is adjourned, and a second
                  notice is delivered to DFA and to the DFA Manager, marked
                  "CONFIDENTIAL/URGENT" indicating the time at which the meeting
                  will be reconvened and including a statement notifying DFA and
                  the DFA Manager that if the DFA Manager fails to attend the
                  reconvened meeting specified in the second notice, then the
                  Major Decision to be considered at such meeting may be
                  approved without any vote by the DFA Manager. This second
                  notice shall be delivered at least two Business Days prior to
                  the date of the reconvened meeting. At such reconvened
                  meeting, the only business that may be conducted is that
                  described in the notice of such meeting.

         7.4 Officers. The officers of the General Partner shall include a
President, a Secretary and such other officers as the Management Committee in
its discretion may appoint, and such officers will have any powers delegated to
them by the Management Committee (subject to any limitations on the authority of
the Management Committee set forth in this Agreement). The initial President of
the General Partner shall be Pete Schenkel. The President of the General Partner
and certain other key employees of the General Partner and Partnership, as
determined from time to time by the Management Committee, shall be entitled to
receive options (the "New Options") to purchase Suiza Common Stock on terms
consistent with Suiza Foods' stock option program for executives then in effect.
At the time that any New Options are granted, the Partnership shall pay to Suiza
Foods in cash the value of such New Options determined under the Black-Scholes
formula using the closing trading price of Suiza Common Stock on the date upon
which such New Options are granted (the "Black-Scholes Prepayment"). Certain
current employees of the Suiza Companies, Suiza GTL, Suiza SoCal and Robinson
Dairy hold options to purchase Suiza Common Stock (the "Existing Options"). When
any New Options or Existing Options are exercised, the Partnership shall
purchase from Suiza Foods for cash the number of shares of Suiza Common Stock
that the persons exercising such options are entitled to receive at a price
equal to the closing trading price of Suiza Common Stock on the date upon which
such options are exercised, minus the amount of any Black-Scholes Prepayment
made with respect to such options, and shall transfer such shares to the
exercising optionees. If any New Options expire without being exercised, Suiza
Foods shall repay to the Partnership the amount of any Black-Scholes Prepayment
made with respect to such New Options.

                                       27
<PAGE>   32

         7.5 Certificate of Limited Partnership; Qualifications to do Business.
The President or another officer of the General Partner shall cause to be filed
on behalf of and at the Partnership's expense such certificates or documents
(including, without limitation, copies, renewals, amendments or restatements of
the Certificate) as may be determined by such officer to be reasonable and
necessary or appropriate for the qualification and operation of a limited
partnership in the State of Delaware and in any other state in which the
Partnership may elect to do business.

         7.6 Compensation and Reimbursement of Partner Expenses; Other
Agreements with Partners.

                  (a) Except as provided in Section 7.6(b) and Section 7.10, no
         Partner shall be compensated for any services rendered to the
         Partnership by such Partner or its designees on the Management
         Committee. Notwithstanding anything to the contrary in this Agreement,
         each Partner shall be reimbursed for out-of-pocket expenses that such
         Partner makes for or on behalf of the Partnership, to the extent such
         expenses are authorized by the Management Committee.

                  (b) Suiza Management and DFA will perform corporate overhead
         services for the Partnership of substantially the same type and to
         substantially the same extent provided by Suiza Management to the Suiza
         Companies, Suiza GTL, Suiza SoCal and Robinson Dairy, and by DFA to SFG
         and to SFG Management, prior to the date hereof (the "Services"). In
         consideration for the Services, the Partnership shall pay Suiza
         Management and DFA a quarterly management fee (the "Management Fee"),
         payable within 45 days after the end of each calendar quarter. From the
         Closing Date through December 31, 2000, the quarterly Management Fee
         payable to Suiza Management and to DFA will be $7,500,000 and $250,000,
         respectively (pro rated for any partial quarter). Thereafter, the
         quarterly Management Fee payable to Suiza Management and to DFA will be
         an amount equal to .164% and .005%, respectively, of the Partnership's
         budgeted gross revenues for that quarter, which percentage will be
         reviewed annually by the Management Committee and may be changed
         annually, which changes, other than changes caused by a material change
         in the duties and responsibilities of a party providing services or by
         a material increase in the costs of providing services, may be made
         only in accordance with Section 7.2(i).

                  (c) Suiza Foods, the Partnership and DFA will enter into one
         or more milk supply agreements pursuant to which DFA will provide raw
         milk to certain Dairy Operations of the Partnership and to The
         Morningstar Group, Inc.

         7.7 Outside Activities; Noncompetition.

                  (a) Subject to Section 7.7(b), a Partner, any Affiliates of a
         Partner, and any director, officer, partner, or employee of a Partner
         or any Affiliate thereof, may have business interests and engage in
         business activities in addition to those relating to the Partnership
         and may engage in any businesses and activities for its own account and
         for

                                       28
<PAGE>   33

         the accounts of others without having or incurring any obligation to
         offer any interest in or funds from such properties, businesses or
         activities to the Partnership or any Partner, and no other provision of
         this Agreement shall be deemed to prohibit the Partners or any such
         other Person from conducting such other businesses and activities.
         Neither the Partnership nor any Partner shall have any rights by virtue
         of this Agreement or the limited liability Partnership relationship
         created hereby in any business Partnerships of the other Partner or any
         Affiliate of such Partner or any director, officer, partner, or
         employee of the other Partner or any Affiliate thereof.

                  (b) No Partner may, directly or indirectly, engage or
         participate in any Dairy Operations within the Territory; provided
         that:

                           (i) nothing in this Section 7.7(b) shall restrict the
                  business operations of any current affiliate of DFA that is
                  not Controlled by DFA;

                           (ii) nothing in this Section 7.7(b) shall be
                  construed as preventing any Partner from (A) engaging in any
                  business after the Closing Date that it engaged in within the
                  Territory prior to the Closing Date solely through entities
                  other than the DFA Companies, or the Suiza Companies and
                  Robinson Dairy, (as applicable), including without limitation
                  the business operations of The Morningstar Group, Inc. and its
                  subsidiaries, Continental Can Company, Inc. and its
                  subsidiaries, and Horizon Organic Holding Corporation; (B)
                  engaging in any business outside the Territory, including
                  Suiza Foods' dairy operations in Puerto Rico; (C) engaging in
                  any business within the Territory in products and services not
                  provided by the Partnership; or (D) being a passive investor
                  or security holder of an interest constituting less than 5% of
                  the equity ownership, voting rights or debt of any of the
                  foregoing; and

                           (iii) if Suiza desires for the Partnership to
                  participate in a Territory Dairy Investment and the Management
                  Committee rejects such Territory Dairy Investment due to a DFA
                  Veto, then Suiza or any of its Affiliates may engage or
                  participate in such Territory Dairy Investment on terms which
                  are no more favorable to Suiza or such Affiliate than those
                  rejected by the Management Committee due to such DFA Veto, and
                  thereafter Suiza or such Affiliate may operate the Dairy
                  Operations acquired in such Territory Dairy Investment.

                  (c) The Partners acknowledge and agree that their respective
         obligations under Section 7.7(b) are a material inducement and
         condition to this Agreement and the obligations of the parties
         hereunder and that the restrictions and remedies contained in this
         Section 7.7 are reasonable as to time, geographic area and scope of
         activity and do not impose a greater restraint than is necessary to
         protect the goodwill and other legitimate business interests of the
         Partnership. It is the intent of all parties hereto that the foregoing
         restrictions against unlawful and unfair competitive activities be
         given the fullest effect consistent with applicable law.

                                       29
<PAGE>   34

                  (d) If the provisions of Section 7.7(b) are found by a court
         of competent jurisdiction to contain unreasonable or unnecessary
         limitations as to time, geographic area or scope of activity, then such
         court is hereby directed to reform such provisions to the minimum
         extent necessary to cause the limitations contained therein as to time,
         geographical area and scope of activity to be reasonable and
         enforceable.

                  (e) The Partners acknowledge and agree that the Partnership
         would be irreparably harmed by any violation of their respective
         obligations under Section 7.7(b) and that, in addition to all other
         rights or remedies available at law or in equity, the parties will be
         entitled to injunctive and other equitable relief to prevent or enjoin
         any such violation, without posting any bond whatsoever.

         7.8 Partnership Funds. The funds of the Partnership shall be deposited
in such segregated money-market Partnership account or Partnership accounts as
are designated by the President. The officers of the Partnership shall be
authorized to sign checks or drafts against any Partnership account, and
representatives of Suiza shall be listed as an alternate signatory with respect
to any such account. Any withdrawals from or charges against such accounts may
be made by officers or agents of the Partnership in accordance with the terms of
the Agreement.

         7.9 Transactions with Affiliates. Except as otherwise permitted in
Section 4.3, Section 7.6(b) and Section 7.6(c) and except for any transaction or
agreement approved as a Major Decision pursuant to Section 7.3, the Partnership
may not enter into any transaction or agreement with any Partner or any
Affiliate of a Partner if the terms of such transaction or agreement are
materially less favorable to the Partnership than the terms that could be
obtained by the Partnership through an arms-length transaction or agreement with
an unrelated party.

         7.10 Indemnification. The Partnership shall indemnify and hold harmless
the General Partner and any director, officer, employee, agent, or
representative of the General Partner, against all liabilities, losses, and
damages incurred by any of them by reason of any act performed or omitted to be
performed in the name of or on behalf of the Partnership, or in connection with
the Partnership's business, including attorneys' fees and any amounts expended
in the settlement of any claims or liabilities, losses, or damages, to the
fullest extent permitted by the Delaware Act. The Partnership shall indemnify
and hold harmless any Limited Partner, employee, agent, or representative of the
Partnership, any Person who is or was serving at the request of the Partnership
acting through the General Partner as a director, officer, partner, trustee,
employee, agent, or representative of another corporation, partnership, joint
venture, trust, or other enterprise, but in no event shall such indemnification
exceed the indemnification permitted by the Delaware Act. Notwithstanding
anything to the contrary in this Section 7.10, in no event shall Limited
Partners be subject to personal liability by reason of the indemnification
provisions of this Agreement.

         7.11 Liability of the Partners.

                  (a) Neither the Partners nor their respective owners,
         directors, officers, employees, or agents nor their designated Managers
         shall be liable to the Partnership or to

                                       30
<PAGE>   35

         the other Partners for errors in judgment or for any acts or omissions
         that do not constitute gross negligence or willful or wanton
         misconduct.

                  (b) Each Partner may exercise any of the powers granted to
         them by this Agreement and perform any of the duties imposed upon them
         hereunder either directly or by or through agents.

         7.12 Suiza Foods Board Seat. For so long as the DFA Partners own at
least 10 % of the Partner Interests, Suiza shall nominate an individual
designated by DFA for election to the Board of Directors of Suiza Foods.

                                  ARTICLE VIII

                       RIGHTS AND OBLIGATIONS OF PARTNERS

         8.1 Limitation of Liability. The Limited Partners shall have no
liability under this Agreement except as provided in Article IV and Sections
6.3, 7.7, 11.9, 11.10 and 14.12 of this Agreement.

         8.2 Return of Capital. No Partner shall be entitled to the withdrawal
or return of its Capital Contribution, except to the extent, if any, that
distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.

                                   ARTICLE IX

                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

         9.1 Records and Accounting. The officers of the Partnership shall keep
or cause to be kept appropriate books and records with respect to the
Partnership's business (including without limitation, any books, records,
statements, or information required to be maintained by the Partnership under
the Delaware Act), which shall at all times be kept at the principal office of
the Partnership or such other office as the Management Committee may approve for
such purposes. Any books and records maintained by the Partnership in the
regular course of its business, including books of account and records of
Partnership proceedings, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, micrographics or any other information storage
device, provided that the books and records so kept are convertible into clearly
legible written form within a reasonable period of time. The books of the
Partnership shall be maintained for financial reporting purposes on the accrual
basis of accounting.

         9.2 Fiscal Year. The Fiscal Year of the Partnership shall be the
calendar year for tax and accounting purposes.

                                       31
<PAGE>   36

         9.3 Reports.

                  (a) The officers of the Partnership shall deliver to each
         Partner, not later than 90 days following the end of each Fiscal Year,
         a balance sheet, an income statement, and an annual statement of source
         and application of funds of the Partnership for such Fiscal Year.

                  (b) No later than 45 days after the last day of each fiscal
         quarter during the term of this Agreement, the officers of the
         Partnership shall use reasonable efforts to cause the Partnership to
         prepare, or cause to be prepared and delivered to each Partner a
         balance sheet together with a profit and loss statement for such fiscal
         quarter together with a cumulative profit and loss statement for the
         year- end with comparative statements for the previous year if
         applicable.

         9.4 Documents. Each Partner shall have the right to inspect, review and
make copies (with such copies at Partnership expense) of documents relating to
the business of the Partnership.

                                    ARTICLE X

                                   TAX MATTERS

         10.1 Tax Matters Partner. Suiza shall be the "Tax Matters Partner" for
Federal income tax purposes pursuant to Section 6231 of the Code with respect to
each applicable taxable year of the Partnership. Suiza is authorized to do
whatever is necessary to qualify as such.

         10.2 Annual Tax Returns.

                  (a) Suiza shall prepare or cause the Independent Accountants
         to prepare, at the Partnership's expense, and shall timely file, or
         cause the timely filing of, all tax returns and shall, on behalf of the
         Partnership, timely file, or cause the timely filing of, all other
         writings required by any governmental authority having jurisdiction to
         require such filing. Suiza shall submit the proposed returns to each
         Partner for its review and approval no later than 15 days prior to the
         due date of the returns, after giving effect to any extensions of time
         unless an extension would effectively make or make unavailable a
         material tax election.

                  (b) If a Partner disagrees with the treatment of any
         partnership item (within the meaning of Section 6231(a)(3) of the Code
         and Regulations) on a tax return of the Partnership, then such Partner
         shall give written notice to Suiza. If, after good faith consultation,
         an agreement regarding the treatment of such item cannot be reached
         within ten (10) days after the receipt of notice, the Partnership shall
         seek written advice from a mutually agreed upon independent tax counsel
         or mutually agreed upon Independent Accountants. Such advice shall
         recommend the treatment which is consistent with the terms of this
         Agreement, the respective interests of the Partners, and for which
         there exists

                                       32
<PAGE>   37

         substantial authority in support thereof. Such recommended treatment
         shall be the one reported on the return.

                  (c) Without the prior approval of the Management Committee, no
         Partner shall file an amended return of the Partnership or a request
         for an administrative adjustment under Section 6227 of the Code, nor
         shall any Partner (other than the Tax Matters Partner, as provided
         herein) commence any administrative or judicial proceeding relating to
         a return of the Partnership. If, after good faith consultation, such
         approval is not provided, no Partner shall file such return or request,
         or commence such proceeding unless a mutually agreed upon independent
         tax counsel renders an opinion that there is substantial authority for
         the proposed treatment of the tax items with respect to which such
         return, request, or proceeding relates. Nothing herein shall be
         construed to prevent a Partner from undertaking any administrative or
         judicial proceeding with respect to its own return.

         10.3 Notice and Limitations on Authority.

                  (a) Each Partner shall notify the other Partners upon receipt
         of any notice regarding a material audit or tax examination of the
         Partnership and upon any request for material information by United
         States federal, state, local, or other tax authorities.

                  (b) Suiza shall, within ten (10) days after the receipt
         thereof, forward to each Partner a photocopy of any material
         correspondence relating to the Partnership received from the Internal
         Revenue Service. Suiza shall, within ten (10) days thereof, advise each
         Partner in writing of the substance of any material conversation
         affecting the Partnership held with any representative of the Internal
         Revenue Service.

                  (c) Suiza shall have all the authority granted by the Code and
         Regulations to the Tax Matters Partner, including the authority:

                           (i) to enter into a settlement agreement with the
                  Internal Revenue Service which purports to bind Partners other
                  than the Tax Matters Partner;

                           (ii) to file a petition as contemplated in Section
                  6226(a) or 6228 of the Code;

                           (iii) to intervene in any action as contemplated in
                  Section 6226(b)(5) of the Code;

                           (iv) to file any request contemplated in Section
                  6227(b) of the Code; and

                           (v) to enter into an agreement extending the period
                  of limitations as contemplated in Section 6229(b)(1)(B) of the
                  Code.

                                       33
<PAGE>   38

         10.4 Tax Elections. Suiza shall do all acts, make all elections and
take whatever reasonable steps are required to maximize, in the aggregate, the
federal, state, and local income tax advantages available to the Partnership and
shall defend all tax audits and litigation with respect thereto at the expense
of the Partnership. Suiza shall maintain the books, records, and tax returns of
the Partnership in a manner consistent with the acts, elections and steps taken
by the Partnership. In making any election for each Fiscal Year for tax
purposes, Suiza shall make such election, to the extent reasonably possible, in
a manner that maximizes the benefit and minimizes the detriment of each such
election to each Partner.

         10.5 Actions in Event of Audit. If an audit of the Partnership's tax
returns occurs, Suiza shall, at the expense of the Partnership, notify the
Partners thereof, participate in the audit and contest, and settle or otherwise
compromise assertions of the auditing agent which may be adverse to the
Partnership in accordance with this Article X. Suiza may, if it determines that
the retention of accountants or other professionals would be in the best
interests of the Partnership, retain such accountants or other professionals to
assist in such audits. The Partnership shall indemnify and reimburse Suiza for
all reasonable expenses, including legal and accounting fees, claims,
liabilities, losses and damages borne by Suiza or its Affiliates which were
incurred in connection with any administrative or judicial proceeding with
respect to any audit of the Partnership's tax returns, except to the extent
caused by the gross negligence or willful misconduct of Suiza.

         10.6 Organizational Expenses. The Partnership shall elect to deduct
expenses incurred in organizing the Partnership ratably over a 60-month period
as provided in Section 709 of the Code.

         10.7 Taxation as a Partnership. No election shall be made by the
Partnership or any Partner for the Partnership to be excluded from the
application of any of the provisions of Subchapter K, Chapter 1 of Subtitle A of
the Code or from any similar provisions of any state tax laws.

                                   ARTICLE XI

                         TRANSFERS OF PARTNER INTERESTS

         11.1 Transfer Restrictions. A Partner may not transfer any portion of
its Partner Interest unless such Partner has otherwise complied with the
provisions of Sections 11.2, 11.3, and 11.4 hereof; provided that the provisions
of Sections 11.2, 11.3 and 11.4 will not apply to (a) a transfer pursuant to
Section 11.9 or 11.10; or (b) a pledge by a Partner of its Partner Interest to
secure bona fide indebtedness to such Partner or its Affiliates or any transfer
of such Partner Interest to or by the pledgee in connection with or following
foreclosure of such pledge. For purposes of this Article XI, the term
"transfer," when used with respect to a Partner Interest, includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange, or any
other disposition.

                                       34
<PAGE>   39

         11.2 Consent of the Management Committee. Except for a transfer by a
Partner to an Affiliate of such Partner, the Partner Interest of a Partner may
not be transferred without the written consent of the Management Committee,
which consent may be unreasonably withheld.

         11.3 Tax Opinion. The transferor of any Partner Interests shall provide
an opinion of counsel, satisfactory to the other Partner, that the proposed
assignment, transfer, or sale would not cause the termination of the Partnership
for federal income tax purposes.

         11.4 Registration. If any Partner Interest is to be assigned,
transferred or sold, either: (a) such Partner Interest shall be registered under
the Securities Act of 1933, as amended, and any applicable state securities
laws; or (b) the transferor shall provide an opinion of counsel that the
proposed assignment, transfer, or sale is exempt from such registration
requirements, which opinion shall not be deemed provided unless and until it is
accepted by the Management Committee. Except as otherwise provided in Section
11.10, the Partnership and the Partners have no obligation or intention
whatsoever either to register Partner Interests for resale under any federal or
state securities laws or to take any action which would make available to any
Person any exemption from the registration requirements of such laws.

         11.5 Prohibited Transfers. Any transfer or purported transfer, whether
by operation of law or otherwise, of a Partner Interest shall be null and void
and of no legal effect if such transfer is prohibited by this Article XI or by
other provisions of this Agreement.

         11.6 Rights of Assignee.

                  (a) Except as provided in this Article XI, and as required by
         operation of law, the Partnership shall not be obligated for any
         purpose whatsoever to recognize the transfer by any Partner of a
         Partner Interest if such transfer violates the terms of this Article
         XI.

                  (b) Any transfer of Partner Interests must be in writing, may
         not contravene any of the provisions of this Agreement or the Delaware
         Act, and must be executed by the transferor and delivered to the
         Partnership and recorded on the books of the Partnership. Any transfer
         which contravenes any of the provisions of this Agreement or the
         Delaware Act shall be of no force and effect and shall not be
         recognized by the Partnership.

                  (c) A transferee of Partner Interests who is not already a
         Partner or is not admitted as a Partner pursuant to Section 11.7 shall
         have no right to require any information or account of the
         Partnership's transactions or to inspect the Partnership books or to
         vote, but shall only be entitled to receive the allocations and
         distributions to which his transferor would otherwise be entitled under
         this Agreement.

                  (d) Any transferee who does not become a Partner and desires
         to make a further transfer of such Partner Interest shall be subject to
         all of the provisions of this Article XI to the same extent and in the
         same manner as any Partner desiring to transfer his Partner Interest.

                                       35
<PAGE>   40

         11.7 Admission as a Partner.

                  (a) Subject to the other provisions of this Article XI, a
         permitted transferee of a Partner Interest (if such transferee is not
         already a Partner) shall be admitted as a Partner only after the
         satisfactory completion of items (i) through (iv) below, and if
         applicable, item (v):

                           (i) The transferee accepts and agrees to be bound by
                  the terms and provisions of this Agreement;

                           (ii) a counterpart of this Agreement and such other
                  documents or instruments as the Management Committee may
                  reasonably require is executed by the transferee to evidence
                  such acceptance and agreement;

                           (iii) the transferee pays or reimburses the
                  Partnership for all reasonable legal fees, filing, and
                  publication costs incurred by the Partnership in connection
                  with the admission of the transferee as a Partner;

                           (iv) the Management Committee approves the admission
                  of such permitted transferee, which approval may be withheld
                  in the unreasonable discretion of such Management Committee;
                  and

                           (v) if the transferee is not an individual, the
                  transferee provides the Partnership with evidence satisfactory
                  to counsel for the Partnership of the authority of such
                  transferee to become a Partner under the terms and provisions
                  of this Agreement.

                  (b) The Management Committee or officers of the Partnership
         shall make all official filings and publications as promptly as
         practicable after the satisfaction by the transferee of the conditions
         contained in this Article XI to the admission of such transferee as a
         Partner.

         11.8 Distributions and Allocations in Respect of Transferred Partner
Interests. If any Partner Interest is sold, assigned, or transferred during any
Fiscal Year without violating the provisions of this Article XI, Profits,
Losses, and all other items attributable to the transferred (or adjusted)
interest for such period shall be divided and allocated between the affected
Persons by taking into account their varying interests during the period in
accordance with Code Section 706(d), using any conventions permitted by law and
approved by the Management Committee. All distributions on or before the date of
such transfer shall be made to the transferor. Solely for purposes of making
such allocations and distributions in the case of a transfer, the Partnership
shall recognize such transfer not later than the end of the calendar month
during which it is given notice of such transfer, provided that if the
Partnership does not receive a notice stating the date such Partner Interest was
transferred and such other information as the Management Committee may
reasonably require within 30 days after the end of the Fiscal Year during which
the transfer occurs, then all of such items shall be allocated, and all
distributions

                                       36
<PAGE>   41

shall be made, to the Person who, according to the books and records of the
Partnership, on the last day of the Fiscal Year during which the transfer
occurs, was the owner of the Partner Interest. Neither the Partnership nor any
Partner shall incur any liability for making allocations and distributions in
accordance with the provisions of this Section 11.8, whether or not any Partner
or the Partnership has knowledge of any transfer of ownership of any interest.

         11.9 Suiza Buy-Out Option.

                  (a) If Suiza proposes any Major Decision and the Management
         Committee rejects such Major Decision solely due to a DFA Veto, then
         Suiza, or an Affiliate of Suiza, shall have the option, exercisable by
         written notice to DFA (the "Buy-Sell Notice") within thirty (30)
         Business Days following the date of the DFA Veto, to purchase all the
         Partner Interests held by the DFA Partners (the "DFA Interests") in
         exchange for the DFA Price, calculated as of the date of the Buy-Sell
         Notice. Any portion of the DFA Price may, at the election of Suiza, be
         paid in shares of Suiza Common Stock; provided such Suiza Common Stock
         is then traded on a national securities exchange or the Nasdaq Stock
         Market. For purposes of this paragraph, each share of Suiza Common
         Stock shall be deemed to have a value equal to the average closing
         price of the Suiza Common Stock over the twenty (20) trading days
         commencing ten (10) business days preceding the date of the Buy-Sell
         Notice. The DFA Price will be allocated among the DFA Partners as
         follows: (i) first to Priority Partners, in an amount equal to their
         aggregate Preferred Returns plus their aggregate Preferred Capital
         Balances, and (ii) second, to all DFA Partners, in proportion to their
         Percentage Interests.

                  (b) If Suiza timely elects to acquire the DFA Interests in
         connection with any DFA Veto, the closing of the transfer of the DFA
         Interests shall occur within 45 days after the date of the Buy-Sell
         Notice or such longer period as may be necessary to satisfy applicable
         legal requirements. At the closing, the DFA Partners shall assign all
         of their DFA Interests to Suiza, or any designated Affiliate of Suiza,
         by written assignment with special warranty of title in a form
         reasonably acceptable to Suiza. The DFA Partners shall convey their
         entire interest in the Partnership, free and clear of all liens,
         claims, and encumbrances, and the DFA Partners shall execute and
         deliver to Suiza, or any designated Affiliate of Suiza, all documents
         which may be reasonably required to give effect to the sale and
         purchase of such DFA Interests. The DFA Partners shall have a right to
         demand a shelf registration of any Suiza Common Stock issued in payment
         of the DFA Price as set forth in the Registration Rights Agreement
         (Suiza Common Stock) of even date herewith.

         11.10 DFA Registration Right. DFA shall have a right to demand
registration of its Percentage Interest as set forth in the Registration Rights
Agreement (Venture Interests) of even date herewith.

                                       37
<PAGE>   42

                                   ARTICLE XII

                           DISSOLUTION AND LIQUIDATION

         12.1 Dissolution.

                  (a) Except as set forth in this Agreement, no Partner shall
         have the right to terminate this Agreement or to dissolve the
         Partnership by its express will or by withdrawal without the consent of
         the other Partners.

                  (b) The Partnership shall be dissolved upon the first to occur
         of any of the following events: (each such event is referred to as a
         "Dissolution Event"):

                           (i) the expiration of its term as provided in
                  Section 1.4;

                           (ii) any Partner suffers an Event of Bankruptcy or is
                  otherwise liquidated and dissolved;

                           (iii) an election to dissolve the Partnership is
                  unanimously approved in writing by the Partners;

                           (iv) any other event occurs that, under the Delaware
                  Act, would cause the Partnership's dissolution; or

                           (v) any pledgee or transferee of a pledgee of Partner
                  Interests having the right to vote more than 50% of the
                  Percentage Interests elects in writing to dissolve the
                  Partnership.

         12.2 Continuation of the Partnership. Upon the occurrence of an event
described in Section 12.1(b)(ii) or Section 12.1(b)(iv), the Partnership shall
be carried on without dissolution if approved by Partners holding 50% or more of
the Percentage Interests. In all other cases, upon the occurrence of an event
described in Section 12.1(b), the Partnership shall be deemed to be dissolved
and reconstituted only if Partners holding 100% of the Percentage Interests
(excluding for these purposes any Percentage Interests held by the Partner with
respect to which such Dissolution Event occurred) elect to continue the
Partnership within 90 days of such event. If no election to continue the
Partnership is made within 90 days of such event, the Partnership shall conduct
only those activities necessary to wind up its affairs. If an election to
continue the Partnership is made upon the occurrence of an event described in
Section 12.1(b), then:

                  (a) the Partnership shall be deemed to be reconstituted and
         shall continue until the end of the term for which it is formed unless
         earlier dissolved in accordance with this Article XII; and

                  (b) all necessary steps shall be taken to amend or restate
         this Agreement and the Certificate of Limited Partnership, provided
         that the right of Partners holding 100% of

                                       38
<PAGE>   43

         the Percentage Interests (excluding for these purposes any Percentage
         Interests held by a Partner with respect to which such Dissolution
         Event occurred) to continue the Partnership shall not exist and may not
         be exercised unless the Partnership has received an opinion of counsel
         acceptable to the Management Committee that (i) the exercise of the
         right would not result in the loss of limited liability of any Partner;
         and (ii) neither the Partnership nor the reconstituted Partnership
         would be treated as an association taxable as a corporation for federal
         income tax purposes upon the exercise of such right to continue.

         12.3 Liquidation.

                  (a) Upon the dissolution of the Partnership, unless an
         election to continue the Partnership is made pursuant to Section 12.2,
         Suiza shall serve as liquidator ("Liquidator") of the Partnership.

                  (b) Upon dissolution or resignation of the Liquidator, a
         successor and substitute Liquidator (who shall have and succeed to all
         rights, powers and duties of the original Liquidator) shall within 30
         days thereafter be approved by the Partners holding 60% of the
         Percentage Interests. The right to appoint a successor or substitute
         Liquidator in the manner provided herein shall be recurring and
         continuing for so long as the functions and services of the Liquidator
         are authorized to continue under the provisions hereof, and every
         reference herein to the Liquidator will be deemed to refer also to any
         such successor or substitute Liquidator appointed in the manner herein
         provided.

                  (c) Except as expressly provided in this Article XII, the
         Liquidator appointed in the manner provided herein shall have and may
         exercise, without further authorization or consent of any of the
         parties hereto, all of the powers conferred upon the Management
         Committee under the terms of this Agreement (but subject to all of the
         applicable limitations, contractual and otherwise, upon the exercise of
         such powers, including the limitations set forth in Section 7.3) to the
         extent necessary or desirable in the good faith judgment of the
         Liquidator to carry out the duties and functions of the Liquidator
         hereunder for and during such period of time as shall be reasonably
         required in the good faith judgment of the Liquidator to complete the
         winding up and liquidation of the Partnership as provided for herein.

                  (d) Except as otherwise provided in this Article XII
         (including Section 12.5 below), the Liquidator shall liquidate the
         assets of the Partnership, and, after making all allocations and
         distributions otherwise required by this Agreement, shall apply and
         distribute the net proceeds of such liquidation in the following order
         of priority:

                           (i) to the creditors of the Partnership, including
                  Partners, in the order of priority provided by applicable law;

                           (ii) then, to each Priority Partner with a Preferred
                  Return, in proportion to the Preferred Return of each such
                  Priority Partner, in an amount up to the Preferred Return of
                  each Priority Partner;

                                       39
<PAGE>   44

                           (iii) then, to each Priority Partner, in proportion
                  to the Preferred Capital Balance of each such Priority
                  Partner, in an amount up to the Preferred Capital Balance of
                  each Priority Partner; and

                           (iv) finally, the remaining balance of the
                  liquidation proceeds, if any, to the Partners in accordance
                  with their respective positive Capital Account balances, after
                  taking into account all allocations of Profit, Loss and other
                  items of income, gain, loss and deduction, and distributions
                  for all periods, including prior distributions made pursuant
                  to this Article XII; provided, however, that, notwithstanding
                  anything in this Article XII to the contrary, the Liquidator
                  may place in escrow a reserve of cash or other assets of the
                  Partnership for contingent liabilities in an amount determined
                  by the Liquidator to be appropriate for such purposes.

         12.4 Reserves. After all of the assets of the Partnership have been
distributed, the Partnership shall terminate. If at any time thereafter any
funds in any cash reserve fund referred to in Section 12.3(d) are released
because the need for such cash reserve fund has ended, such funds shall be
distributed to the Partners in the same manner as if such distribution had been
made pursuant to Section 12.3(d).

         12.5 Distribution in Kind. Notwithstanding the provisions of Section
12.3 which require the liquidation of the assets of the Partnership, but subject
to the order of priorities set forth therein and subject also to Section 12.4,
if upon the dissolution of the Partnership the Management Committee determines
that an immediate sale of part or all of the Partnership's assets would be
impractical or would cause undue loss to the Partners, the Liquidator may, in
good faith, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (other than those to
Partners). The Liquidator may distribute to the Partners, in lieu of cash, such
Partnership assets as the Liquidator deems not suitable for liquidation. Any
distributions in kind shall be subject to such conditions relating to the
disposition and management thereof as the Liquidator and the Management
Committee deem reasonable and equitable. The Liquidator shall value any property
distributed in kind based upon such property's fair market value as determined
using such reasonable method of valuation as it may adopt.

         12.6 Disposition of Documents and Records. All documents and records of
the Partnership, including, without limitation, all financial records, vouchers,
canceled checks and bank statements, shall be delivered to Suiza upon
termination of the Partnership. Suiza shall retain such documents and records
for a period of not less than six (6) years and shall make such documents and
records available during normal business hours to any other Partner for
inspection and copying at the other Partner's cost and expense.

         12.7 Negative Capital Accounts. If, after the allocations of Profit,
Loss, and other items of income, gain, loss, deduction or credit under Article V
and after distributions of cash under Article VI, any Partner shall ever have a
negative balance in such Partner's Capital Account, no Partner shall have any
obligation to restore such negative balance, or to make any

                                       40
<PAGE>   45

contribution to the capital of the Partnership by reason thereof, and such
negative balance shall under no circumstances be considered a liability of the
Partnership or of any Partner.

         12.8 Filing of Certificate of Cancellation. Upon the completion of the
distribution of Partnership property as provided in Sections 12.3, 12.4, and
12.5, the Partnership shall be terminated, and the Liquidator (or the Partners
if necessary) shall cause the Certificate to be canceled and will take such
other actions as may be necessary to terminate the Partnership.

         12.9 Return of Capital. No Partner shall be personally liable for the
return of the Capital Contributions of any other Partners, or any portion
thereof, it being expressly understood that any such return shall be made solely
from Partnership assets.

         12.10 Waiver of Partition. Each Partner hereby waives any rights to
partition of the Partnership property.

                                  ARTICLE XIII

                             AMENDMENT OF AGREEMENT

         13.1 Amendment Procedures.

                  (a) Amendments to this Agreement may be proposed by any
         Partner, which shall give written notice to all Partners of the text of
         such amendment, together with a statement of the purpose of such
         amendment.

                  (b) Proposed amendments to this Agreement shall be adopted if
         they have been approved in writing by Partners holding 90% of the
         Percentage Interests; provided that any amendment that affects the
         Preferred Partners in any material respect must also be approved in
         writing by Partners with aggregate Preferred Capital Balances equal to
         at least 90% of the aggregate Preferred Capital Balances of all
         Priority Partners. The President shall, within a reasonable time after
         the adoption of any amendment to this Agreement, make official filings
         or publications required or desirable to reflect such amendment,
         including any required filing for recordation of any parallel amendment
         to the Certificate.

                                   ARTICLE XIV

                               GENERAL PROVISIONS

         14.1 Addresses and Notices. Any notice provided in or permitted under
this Agreement shall be made in writing and may be given or served by: (a)
delivering the same in person to the party to be notified; (b) depositing the
same in the mail, postage prepaid, registered or certified with return receipt
requested, and addressed to the party to be notified at the address herein
specified; (c) delivering the same on a prepaid basis via a nationally
recognized courier service, such as Federal Express; or (d) sending the same by
facsimile transmission, followed by delivery

                                       41
<PAGE>   46

of a hard copy via a nationally recognized courier service, such as Federal
Express. If notice is deposited in the mail pursuant to this Section 14.1, it
will be deemed received on the third (3rd) Business Day after it is so
deposited. Notice given in any other manner shall be deemed received only if and
when actually received by the party to be notified. For the purpose of notice,
the address of the parties shall be, until changed as hereinafter provided for,
as follows:

    If to any DFA Partner:                      with a copy to:

    Dairy Farmers of America, Inc.              McDermott, Will & Emery
    Northpointe Tower, Suite 1000               227 West Monroe Street
    10220 N. Executive Hills B-1                Chicago, Illinois 60606-5096
    Kansas City, MO 64153                       Attention: Michael R. Fayhee
    Attention: President and General Counsel    Telecopy: (312) 984-7700
    Telecopy: 816-801-6593

    If to any Suiza Parent:                     with a copy to:

    Suiza Foods Corporation                     Hughes & Luce, L.L.P.
    2515 McKinney Ave., LB 30, Suite 1200       1717 Main Street, Suite 2800
    Dallas, Texas 75201                         Dallas, Texas 75201
    Attention: Chief Executive Officer          Attention: William A. McCormack
    and General Counsel
    Telecopy: (214) 303-3499                    Telecopy: (214) 939-5849

The parties shall have the right from time to time and at any time to change
their respective addresses and each shall have the right to specify as its
address any other address by at least 15 days' prior written notice to the other
parties. Each party shall have the right from time to time to specify additional
parties (not to exceed two additional parties) to whom notice hereunder must be
given by delivering to the other party 15 days' prior written notice thereof,
setting forth the address of such additional parties. Notice required to be
delivered hereunder to any party shall not be deemed to be effective until the
additional parties, if any, designated by such party have been given notice in a
manner deemed effective pursuant to the terms of this Section 14.1.

         14.2 Titles and Captions. All article and section titles and captions
in this Agreement are for convenience only. They shall not be deemed part of
this Agreement and in no way define, limit, extend or describe the scope or
intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.

         14.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. The locative adverbs "hereof,"
"herein," "hereafter," etc. refer to this Agreement as a whole.

                                       42
<PAGE>   47

         14.4 Further Action. The parties shall execute all documents, provide
all information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.

         14.5 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives, and permitted assigns.

         14.6 Integration. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.

         14.7 No Third Party Beneficiary. This Agreement is made solely and
specifically between and for the benefit of the parties hereto, and their
respective successors and assigns subject to the express provisions hereof
relating to successors and assigns, and no other Person whatsoever shall have
any rights, interest, or claims hereunder or be entitled to any benefits under
or on account of this Agreement as a third party beneficiary or otherwise. It is
expressly understood that the right of the Partnership or the Partners to
require any additional Capital Contributions under the terms of this Agreement
shall not be construed as conferring any rights or benefits to or upon any
Person not a party to this Agreement, or the holder of any obligations secured
by a mortgage, deed of trust, security interest or other lien or encumbrance
upon or affecting the Partnership or any interest of a Partner therein.

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

         14.9 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a
transferee, upon executing and delivering such documents as required by the
Management Committee.

         14.10 APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW.

         14.11 Invalidity of Provisions. If any provision of this Agreement is
declared or found to be illegal, unenforceable or void, in whole or in part,
then the parties shall be relieved of all obligations arising under such
provision, but only to extent that it is illegal, unenforceable or void, it
being the intent and agreement of the parties that this Agreement shall be
deemed amended by modifying such provision to the extent necessary to make it
legal and enforceable while preserving

                                       43
<PAGE>   48

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

         14.12 Confidentiality. Each party to this Agreement agrees to keep
confidential the terms of this Agreement and any materials provided in
connection with this Agreement. Notwithstanding the foregoing, each party to
this Agreement may disclose the terms, and any and all materials provided in
connection with this Agreement (a) to its counsel, accountants, auditors or
other agents whose custom it is to hold such information confidential, (b) as
may be required by any statute, court order, administrative order or decree of
governmental ruling or regulation of the United States or other applicable
jurisdiction, including Internal Revenue Service auditors, or as may be
requested by the Internal Revenue Service or any other governmental entity, or
(c) to such other Persons as are reasonably deemed necessary by such party to
protect the interests of such party or for the purposes of enforcing such
documents.

                       SIGNATURE PAGES ARE ATTACHED HERETO

                                       44
<PAGE>   49

         IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the day and year first above written.

                                      PARTNERS:

                                      SUIZA FLUID DAIRY GROUP HOLDINGS,
                                      INC., a Nevada corporation

                                      By: /s/ GREGG L. ENGLES
                                          --------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------

                                      DAIRY FARMERS OF AMERICA, INC., a
                                      Kansas cooperative marketing association

                                      By: /s/ GARY E. HANMAN
                                          --------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title: President & Chief Executive Officer
                                            ------------------------------------

                                      MID-AM CAPITAL, L.L.C., a Delaware
                                      limited liability company

                                      By: /s/ GERALD L. BOS
                                          --------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title: Chief Executive Officer
                                            ------------------------------------

                                      GENERAL PARTNER:

                                      SUIZA FLUID DAIRY GROUP GP, LLC,
                                      a Delaware limited liability company

                                      By: /s/ GREGG L. ENGLES
                                          --------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------

                                       45<PAGE>   1
                                                                    EXHIBIT 10.1

              AMENDMENT NUMBER THREE TO LOAN AND SECURITY AGREEMENT

         This Amendment Number Three to Loan and Security Agreement
("Amendment") is entered into as of November 24, 1999, among SAMUELS JEWELERS,
INC., a Delaware corporation (the "Borrower"), on the one hand, and the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), and FOOTHILL CAPITAL CORPORATION, as Agent ("Agent"), on the other
hand.

                                    RECITALS

         A. Borrower, Lenders and Agent have previously entered into that
certain Loan and Security Agreement, dated as of October 2, 1998, as amended as
of April 15, 1999 and August 30, 1999 (the "Agreement").

         B. Borrower has entered into that certain Stock Purchase Agreement,
dated October 20, 1999, with Harry S. Cohen and Steven D. Singleton (as amended,
the "Purchase Agreement") pursuant to which Borrower is acquiring all of the
outstanding shares of capital stock of C&H Rauch, Inc., a Kentucky corporation
("Rauch").

         C. Concurrently with the closing of Borrower's purchase of Rauch
pursuant to the Purchase Agreement, Borrower intends to merge Rauch with and
into Borrower (the "Merger").

         D. Borrower, Lenders and Agent desire to consent to Borrower's purchase
of Rauch and the Merger and to further amend the Agreement as provided for and
on the conditions herein.

         NOW, THEREFORE, Borrower, Lenders and Agent hereby amend certain
provisions of the Agreement as follows:

         1. DEFINITIONS. All initially capitalized terms used in this Amendment
shall have the meanings given to them in the Agreement unless specifically
defined herein.

         2.       AMENDMENTS.

                  2.1 The following new definitions are added to Section 1.1 of
the Agreement in appropriate alphabetical order:

                           "Excess Availability" means, as of the date of
                  determination: Borrower's unrestricted cash and cash
                  equivalents, plus Availability, less accounts payable that are
                  aged in excess of levels approved by Foothill.

                                       1
<PAGE>   2

                           "Permitted Rauch Notes Payments" means payments of
                  regularly scheduled interest under the Rauch Notes as provided
                  under the terms of such notes in effect on November 24, 1999,
                  plus payments of principal pursuant to the terms of such notes
                  (including at the regularly scheduled maturity thereof) in
                  effect on November 24, 1999, so long as at the time of such
                  payment (a) no Event of Default is currently in existence, and
                  (b) after taking such payment into account Borrower would have
                  (and would have had at all times during the 30 days preceding
                  such payment) Excess Availability of not less than $5,000,000.

                           "Rauch Notes" means, collectively, those certain 3
                  promissory notes, each dated as of November 24, 1999, by
                  Borrower in favor of Harry S. Cohen and Steven D. Singleton,
                  in the aggregate outstanding principal amounts of
                  [$6,000,000].

                  2.2 Section 7.1 (b) of the Agreement is amended to read as
follows:

                           "(b) Indebtedness set forth on Schedule 7.1 and the
                  Rauch Notes;"

                  2.3 Section 7.8 (a) of the Agreement is amended to read as
follows:

                           "(a) Prepay, redeem, retire, defease, purchase or
                  otherwise acquire any Indebtedness owing to any third Person
                  other than (i) Permitted Rauch Notes Payments, and (ii) the
                  Obligations, in accordance with this Agreement, and"

                  2.4 Section 7.20 (b) of the Agreement is amended to read as
follows:

                           "(b) Tangible Net Worth. A Tangible Net Worth of at
                  least the following amounts as of the last day of the fiscal
                  quarters of Borrower ending on or about the last day of the
                  following months:

<TABLE>
<CAPTION>
                  Month                              Minimum Tangible Net Worth
                  -----                              --------------------------
<S>                                                  <C>
                  November 1999                      $14,500,000
                  February 2000                      $24,000,000
                  May 2000                           $23,000,000
                  August 2000                        $21,000,000
                  November 2000                      $20,000,000
                  February 2001                      $31,500,000
                  May 2001                           $31,500,000
                  August 2001                        $29,500,000
</TABLE>

                                       2
<PAGE>   3

                  2.5 Section 7.21 of the Agreement is amended to read as
follows:

                           7.21 CAPITAL EXPENDITURES. Make capital expenditures
                  in any fiscal year in excess of the following amounts for the
                  following Fiscal Years (each a "Capital Budget"):

                                    (a) $11,500,000  in Borrower's  Fiscal Year
                  ending 2000; and

                                    (b) for each of Borrower's Fiscal Years
                  commencing with its Fiscal Year ending 2001, $7,500,000 plus
                  50% of the unused portion of the prior Fiscal Year's Capital
                  Budget.

                  2.6 Section 8.11 of the Agreement is hereby amended to read as
follows:

                           "If Borrower makes any payment on the Rauch Notes
                  other than a Permitted Rauch Notes Payment, or if Borrower
                  makes any payment on account of Indebtedness that has been
                  contractually subordinated in right of payment to the payment
                  of the Obligations, except to the extent such payment is
                  permitted by the terms of the subordination provisions
                  applicable to such Indebtedness;"

                  2.7 Schedule E-1 of the Agreement is amended in its entirety
as set forth on Schedule E-1 to this Amendment.

                  2.8 Agent and Lenders hereby consent to Borrower's purchase of
Rauch in accordance with the terms of the Purchase Agreement and the Merger of
Rauch into Borrower.

                  2.9 Borrower agrees to do each of the following within 45 days
of the completion of the Merger of Rauch into Borrower: (i) deliver to Agent a
reviewed opening balance sheet for the Borrower reflecting the combined
entities; and (ii) terminate any depositary or cash collection accounts
maintained with BankBoston respecting Collections for any of the C. H. Rauch
retail store locations, and commence forwarding all such Collections through the
cash management system currently in place with respect to the other retail store
locations of Borrower, and in conformity with Section 2.8 of the Loan Agreement.
Failure to comply with either of these conditions shall be an Event of Default
under the Loan Agreement.

         3. REPRESENTATIONS AND WARRANTIES. Borrower hereby affirms to Lenders
and Agent that all of Borrower's representations and warranties set forth in the
Agreement are true, complete and accurate in all respects as of the date hereof
(except to the extent such representations and warranties relate solely to an
earlier date).

         4. DEFAULTS; WAIVER. Borrower hereby affirms to Lenders and Agent that
no Default or Event of Default exists as of the date hereof.

                                       3
<PAGE>   4

         5. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
expressly conditioned upon the following:

                  (a) Receipt by Agent of fully executed copies of this
Amendment;

                  (b) Receipt by Agent of evidence satisfactory to Agent that:
(i) the purchase of Rauch by Borrower has been consummated in accordance with
the Purchase Agreement and (ii) the Merger has been completed; and

                  (c) Payment of a fee to Agent, for the pro rata account of
Lenders, in the amount of $50,000.

         6. COSTS AND EXPENSES. Borrower shall pay to Agent all of Agent's
out-of-pocket costs and expenses (including, without limitation, the reasonable
fees and expenses of its counsel, which counsel may include any local counsel
reasonably deemed necessary, search fees, filing and recording fees,
documentation fees, appraisal fees, travel expenses, and other fees) arising in
connection with the preparation, execution, and delivery of this Amendment and
any related documents.

         7. LIMITED EFFECT. In the event of a conflict between the terms and
provisions of this Amendment and the terms and provisions of the Agreement, the
terms and provisions of this Amendment shall govern. In all other respects, the
Agreement, as amended, modified, and supplemented hereby, shall remain in full
force and effect.

                                       4
<PAGE>   5

         8. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which when so executed and delivered shall be deemed to be an original. All
such counterparts, taken together, shall constitute but one and the same
Amendment. This Amendment shall become effective upon the execution of a
counterpart of this Amendment by each of the parties hereto.

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first set forth above.

                             SAMUELS JEWELERS, INC.,
                             a Delaware corporation

                             By:    /s/ DOUG BULLOCK
                                    --------------------------------------------
                             Title: Vice President
                                    --------------------------------------------

                             FOOTHILL CAPITAL CORPORATION,
                             a California corporation, as Agent and as a Lender

                             By:    /s/ ROBERT CASTINE
                                    --------------------------------------------
                             Title: Vice President
                                    --------------------------------------------

                             LASALLE BUSINESS CREDIT, INC.,
                             a Delaware corporation

                             By:    /s/ HERBERT M. KIDD, II
                                    --------------------------------------------
                             Title: S. V. P.
                                    --------------------------------------------

                             SUNROCK CAPITAL CORP.,
                             a Delaware corporation

                             By:    /s/ JOHN D. ERWIN
                                    --------------------------------------------
                             Title: S. V. P.
                                    --------------------------------------------

                                       5

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