Document:

exv10w1

 

CHANGE IN CONTROL AGREEMENT

     THIS
CHANGE IN CONTROL AGREEMENT (this “Agreement”) is entered into effective as of
the 9th day of May, 2006, by and between DEAN FOODS
COMPANY, a Delaware corporation (together with its subsidiaries,
the “Company”), and JACK CALLAHAN
(the “Executive”).

RECITALS

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

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

     C. The Executive is a key executive of the Company.

AGREEMENTS

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

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

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

     “Annual Pay” means the sum of (i) an amount equal to the annual base salary rate payable to
the Executive by the Company at the time of termination of his or her employment plus (ii)
an amount equal to the target bonus established for the Executive for the Company’s fiscal year in
which his or her termination of employment occurs.

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

 

 

notice clearly and fully describing the particular acts or omissions which the Board or the
Chairman of the Board reasonably believes in good faith constitutes “Cause” and (b) an
opportunity, within thirty (30) days following his or her receipt of such notice, to meet in
person with the Board or the Chairman of the Board to explain or defend the alleged acts or
omissions relied upon by the Board and, to the extent practicable, to cure such acts or omissions.
Further, no act or omission shall be considered as “willful” or “intentional” if the Executive
reasonably believed such acts or omissions were in the best interests of the Company.

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

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

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

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

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

     (2) (A) the removal of the Executive from the Executive’s position as
Executive Vice President and Chief Financial Officer of the ultimate parent of the business of the Company or (B) any other
significant reduction in the nature or status of the Executive’s duties or
responsibilities;

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

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

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

     2. Benefits.

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

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

               (ii) The Company shall pay to the Executive a cash payment in an amount equal to three (3)
times the Executive’s Annual Pay. This amount shall be paid by the Company in accordance with
Section 2(e) hereof.

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               (iii) The Company shall pay to the Executive a cash payment in an amount equal to the sum of
(A) the Executive’s unvested account balance under the Company’s 401(k) plan, and (B) three (3)
times the amount of the most recent matching contribution that the Company paid into the
Executive’s 401(k) account. This amount shall be paid as soon as administratively practicable
after the date of the Executive’s termination of employment.

               (iv) The Executive and his or her eligible dependents shall be entitled for a period of two
(2) years following his or her date of termination of employment to continued coverage, on the same
basis as similarly situated active employees, under the Company’s group health, dental, long-term
disability and life insurance plans as in effect from time to time (but not any other welfare
benefit plans or any retirement plans); provided that coverage under any particular benefit plan
shall expire with respect to the period after the Executive becomes covered under another
employer’s plan providing for a similar type of benefit. In the event the Company is unable to
provide such coverage on account of any limitations under the terms of any applicable contract with
an insurance carrier or third party administrator, the Company shall pay the Executive an amount
equal to the cost of such coverage.

               (v) The Company shall pay all costs and expenses, up to a maximum of $50,000, related to
outplacement services for the Executive, the provider of which shall be selected by the Executive
in his or her sole discretion. This amount shall be paid directly to the provider of such
services.

          (b)
Voluntary Termination. If, at any time during the 13th month after
a Change in Control, the Executive voluntarily terminates his or her employment with the
Company for any reason, the Executive shall be entitled to receive the same payments and
benefits as set forth in Sections 2(a)(i) through 2(a)(v) hereof.

          (c)
Accelerated Vesting. All of the Executive’s unvested awards under the
Company’s stock award plans shall automatically and immediately vest in full upon the
occurrence of a Change in Control.

          (d)
No Duplication; Other Severance Pay. There shall be no duplication of
severance pay in any manner. In this regard, the Executive shall not be entitled to
Termination
Pay hereunder for more than one position with the Company and its Affiliates. If the Executive
is
entitled to any notice or payment in lieu of any notice of termination of employment required
by
Federal, state or local law, including but not limited to the Worker Adjustment and Retraining
Notification Act, the severance compensation to which the Executive would otherwise be
entitled
under this Agreement shall be reduced by the amount of any such payment in lieu of notice. If
Executive is entitled to any severance or termination payments under any employment or other
agreement (other than stock award agreements) with the Company or any of its Affiliates, the
severance compensation to which Executive would otherwise be entitled under this Agreement
shall be reduced by the amount of such payment. Except as set forth above, the foregoing
payments and benefits shall be in addition to and not in lieu of any payments or benefits to
which
the Executive and his or her dependents may otherwise be entitled to under the Company’s
compensation and employee benefit plans. Nothing herein shall be deemed to restrict the right
of

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the Company from amending or terminating any such plan in a manner generally applicable to
similarly situated active employees of the Company and its Affiliates, in which event the
Executive shall be entitled to participate on the same basis (including payment of applicable
contributions) as similarly situated active executives of the Company and its Affiliates.

          (e)
Mutual Release. Termination Pay shall be conditioned upon the execution by the
Executive and the Company of a valid mutual release to be prepared by the Company pursuant to which
the Executive and the Company shall each mutually release each other, to the maximum extent
permitted by law, from any and all claims either party may have against the other that relate to or
arise out of the employment or termination of employment of the Executive, except such claims
arising under this Agreement, any employee benefit plan, or any other written plan or agreement (a
“Mutual Release”). The full amount of Termination Pay shall be paid in a lump sum in cash to the
Executive within ten (10) days following receipt by the Company of a Mutual Release which is
properly executed by the Executive; provided, however, that in the event applicable law allows the
Executive to revoke the Mutual Release for a period of time, and the Mutual Release is not revoked
during such period, the full amount of Termination Pay shall be paid to the Executive following the
expiration of such period.

     3. Excise Taxes.

          (a)
Gross-Up Payment. Anything in this Agreement to the contrary
notwithstanding and except as set forth below, if it is determined that any payment or
distribution
(a “Payment”) by the Company to or for the benefit of the Executive (whether paid or payable
or
distributed or distributable pursuant to the terms of this Agreement or otherwise, but
determined
without regard to any additional payments required under this Section 3) including, without
limitation, vesting of options, would be subject to the excise tax imposed by Section 4999 of
the
Code, or if any interest or penalties are incurred by the Executive with respect to such
excise tax
(such excise tax, together with any such interest and penalties, being hereinafter
collectively
referred to as the “Excise Tax”), then the Executive shall be entitled to receive an
additional
payment (a “Gross-Up Payment”) in an amount sufficient to pay all taxes (including any
interest
or penalties imposed with respect to such taxes), including, without limitation, any income
taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment.

          (b)
Calculation of Gross-Up Payment. Subject to the provisions of paragraph
(c) of this Section 3, all determinations required to be made under this Section 3, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be used in arriving at such determination, shall be made by a certified
public accounting firm selected by the Company and reasonably acceptable to the Executive (the
“Accounting Firm”), which shall be retained to provide detailed supporting calculations both
to
the Company and the Executive. If the Accounting Firm is serving as accountant or auditor for
the individual, entity or group effecting the Change in Control, the Executive shall have the
right
to appoint another nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).
All fees and expenses of the Accounting Firm shall be paid solely by the Company. Any Gross-

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Up Payment, as determined pursuant to this Section 3, shall be paid by the Company to the
Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any
determination by the Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments
which should have been made will not have been made by the Company
(“Underpayment’’), consistent
with the calculations required to be made hereunder. If the Company exhausts its remedies pursuant
to paragraph (c) of this Section 3 and the Executive thereafter is required to pay an Excise Tax
in an amount that exceeds the Gross-Up Payment received by the Executive the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.

          (c)
Contested Taxes. The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would result in an Underpayment. Such
notification shall be given as soon as practicable but no later than ten (10) business days after
the Executive is informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid or appealed. The Executive
shall not pay such claim prior to the expiration of the 30-day period following the date on which
it gives such notice to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the Executive shall:

               (i) give the Company any information reasonably requested by the Company relating to such
claim,

               (ii) take such action in connection with contesting such claims as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by the Company,

               (iii) cooperate with the Company in good faith in order to effectively contest such claim,
and

               (iv) permit the Company to participate in any proceedings relating to such claim;

     provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing provisions of this
paragraph (c), the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative appeals,

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proceedings, hearings and conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or to
contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues with respect to the
amount of the Gross-Up Payment, and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

          (d)
Refunds. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to this Section 3, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto).

     4. Certain Covenants by the Executive.

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

               (i) Become associated with (as defined below) any company or
business (other than the Company or any Affiliate of the Company) engaged primarily in the
manufacture, distribution, sale or marketing of any of the Relevant Products (as defined below) in
any geographical area in which the Company or any of its Affiliates operates;

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

               (iii) Solicit, induce, recruit or encourage, either directly or indirectly, any employee
of the Company or any of its Affiliates to leave his or her employment with the Company or any of
its Affiliates, or employ or offer to employ any employee of the Company or

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any of its Affiliates. For the purposes of this section, an employee of the Company or any of its
Affiliates shall be deemed to be an employee of the Company or any such Affiliate while employed by
the Company or such Affiliate and for a period of 60 days thereafter.

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

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

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

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

     Notwithstanding the foregoing, (1) the restrictions of this Section 4(a) shall terminate
immediately if the Executive’s employment with the Company or any of its Affiliates is terminated
by the Company or such Affiliate without Cause, and (2) the Executive is not prohibited from
owning, either of record or beneficially, not more than five percent (5%) of the shares or other
equity of any publicly traded company. The provisions of this Section 4(a) are not intended to
override, supercede, reduce, modify or affect in any manner any other
non-competition or
non-solicitation agreement between the Executive and the Company or any of its Affiliates. Any
such covenant or agreement shall remain in full force and effect in accordance with its terms. The
Company will be entitled to injunctive and other relief to prevent or enjoin any violation of the
provisions of this Agreement.

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

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

          (d)
Nondisparagement. The Executive and the Company agree that, for so
long as the Executive remains employed by the Company, and for a period of two years
following the termination of the Executive’s employment, neither the Executive nor the
Company will make or authorize any public statement, whether orally or in writing, that

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disparages
the other party hereto with respect to such other party’s business interests or
practices; provided, that neither party shall be restricted in connection with statements made in
context of any litigation, arbitration or similar proceeding involving the other party hereto.

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

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

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

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

     8. Entire
Agreement. By executing this Agreement, the Executive agrees that any
and all agreements executed between the Company (or any subsidiary of the Company or any
predecessor of the Company or any subsidiary of the Company) and the Executive prior to the
date hereof regarding benefits resulting from a Change in Control are hereby nullified and
cancelled in their entirety, and this Agreement shall substitute for and fully replace any
such prior
agreements. This Agreement shall constitute the entire agreement between the parties hereto
with respect to the subject matter hereof. This Agreement may not be modified in any manner
except by a written instrument signed by both the Company and the Executive.

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

To the Executive:

Jack Callahan

89 Logan Road

New Canaan, CT 06840

To the Company:

DEAN FOODS COMPANY

2515 McKinney Avenue, Suite 1200, LB 30

Dallas, Texas 75201

Attn.: General Counsel

Tel.: 214-303-3400

Fax: 214-303-3499

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

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

	 	 	 	 	 	 	 
	 	 	DEAN FOODS COMPANY	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Michelle Goolsby	 	 
	 	 	 	 	 
	 

	 	Name:
	 	MICHELLE GOOLSBY	 	 
	 

	 	Title:
	 	EVP & General Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ JACK F. CALLAHAN JR.	 	 
	 	 	 	 	 
	 	 	JACK F. CALLAHAN JR.	 	 

11exv10w2

 

PROPRIETARY INFORMATION, INVENTIONS AND NON-COMPETE AGREEMENT

          THIS
PROPRIETARY INFORMATION, INVENTIONS AND NON-COMPETE AGREEMENT (this
“Agreement”),
dated as of the
9th day of May, 2006, between Dean Foods Company, a Delaware corporation (“the
Company”), having its principal place of business at 2515 McKinney Avenue, Suite 1200, Dallas,
Texas 75201, and Jack Callahan (“Employee”).

          WHEREAS, the Company has offered Employee employment as Executive Vice President and Chief
Financial Officer of the Company; a position which will result in Employee acquiring substantial
knowledge of the operations and practices of the business of the Company;

          WHEREAS, the Company desires to prevent any competitive business from securing or utilizing
the services of Employee, to the extent and for the period of Employee’s employment and for a
reasonable period thereafter; and

          WHEREAS, as a condition to the employment of Employee, the Company has required that Employee
enter into this Agreement.

          NOW, THEREFORE, it is agreed as follows:

          1.
Acknowledgments. Employee acknowledges that (i) the Company is
engaged in a continuous program of research, development, and production respecting its
business throughout the United States and Canada (the foregoing, together with any other
businesses in which the Company engages, from the date hereof to the date of the termination
of
Employee’s employment with the Company, is hereinafter referred to as the “Company
Business”); (ii) Employee’s services to the Company will be unique and have significant value
to
the Company, and Employee may make new contributions and inventions of value to the
Company; (iii) Employee’s work for the Company allows Employee access to trade secrets of, and
confidential information concerning, Company; (iv) the Company Business is national and
international in scope; (v) the Company would not have agreed to employ Employee but
for the agreements and covenants contained in this Agreement; and (vi) the agreements and
covenants contained in this Agreement are necessary and essential to protect the business,
goodwill, and customer relationships that the Company has expended significant resources to
develop.

          2.
Ownership of Works. The Company shall own all rights, including all trade
secrets and copyrights, in and to all discoveries, developments, designs, improvements,
inventions, formulas, processes, techniques, know-how and data, whether patentable under
patent or registerable under copyright or similar statutes or reduced to practice and all
documentation thereof created by Employee, during the time Employee is employed by the
Company, whether created during or outside normal business hours or on the Company
premises or at some other location and that: (i) directly relate to or are derived from the
Company Business; and (ii) result from or are derived from any task or work assigned to
Employee or work performed by Employee for the Company (collectively,
“Works”). To the

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extent that any Works do not qualify as works made for hire under U.S. copyright law, this
Agreement shall constitute an irrevocable assignment by Employee to the Company of the ownership
of, and rights of copyright in, Works. Employee agrees to give the Company or its designees all
assistance reasonably required to protect such rights.

          3.
Inventions. If Employee individually or jointly makes, conceives of, or
reduces to practice any invention, technique, recipe, process, improvement, modification,
development, documentation, data, design, idea, discovery, trademark, trade secret, formula,
process, or other know-how, whether patentable or not, in the course of performing services
for
the Company, that directly relates to the Company Business
(collectively, “Inventions”),
Employee will and hereby does assign to the Company Employee’s entire right, title and
interest in and to such Inventions. Employee agrees that all Inventions shall be the sole
property of the Company and its assigns, and the Company and its assigns shall be the sole
owner of all patents, copyrights, and other rights in connection therewith. Employee will
disclose any such Inventions (to the extent Employee knows such inventions are “Inventions” as
defined herein) to an officer of the Company and will, upon request, promptly sign a specific
assignment of title to the Company and do anything else reasonably necessary without
additional compensation to enable the Company to secure patent, trade secret, or any other
proprietary rights in the United States or foreign countries. Employee agrees to execute any
documents deemed necessary or advisable by the Company to effect the terms of this
paragraph. Employee agrees that after termination of employment with the Company
Employee shall not use any Inventions, except in furtherance of the Company Business and
except to the extent such Inventions are in the public domain through no fault of Employee.

          4.
Non-Disclosure. Employee recognizes that the Company competes in a
highly competitive field and that the Company possesses and will continue to possess
information of commercial value that relates to the Company Business, including but not
limited to trade secrets, technical and scientific information, financial business
information,
processes, recipes, formulas, data, know-how, improvements, inventions, product concepts,
discoveries, developments, designs, inventions, techniques, marketing plans,
strategies,
forecasts, new products, blueprints, specifications, programs, ideas, customer lists, vendor
lists,
pricing and other structures, marketing and business strategies, budgets, projections,
licenses,
costs, financial data, and plans, proposals and information about the Company’s employees
and/or consultants (collectively, “Proprietary Information”). Notwithstanding the foregoing,
Proprietary Information shall not include information that is publicly available when
received,
or thereafter becomes publicly available through no fault of Employee or is otherwise
disclosed by the Company to another party without obligation of confidentiality. Employee
agrees that the Proprietary Information constitutes a unique and valuable asset which is
essential to the Company’s business success, and that any release of Proprietary Information
would be harmful to the Company and/or its customers. To protect the Company’s Proprietary
Information, Employee agrees that at all times, including during and after the term of
Employee’s
employment, Employee will not disclose to any person, firm, company, or corporation or use for
Employee’s own benefit or for the benefit of any third party (except in furtherance of
Company Business or affairs of the Company) any and all Proprietary Information that Employee
may have acquired in the course of or as an incident to Employee’s employment with the
Company. Employee further agrees to take all reasonable precautions to protect against the

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intentional, negligent, or inadvertent disclosure by Employee of the Company’s Proprietary
Information to any other person or business entity, except in furtherance of the Company Business.

          5.
Non-Competition. Employee understands and agrees that during Employee’s employment
with the Company, Employee will be provided access to specialized information related to Company
Business and trade secrets, as well as the Company’s customers and their confidential information.
Employee further agrees that if this information were used in competition against the Company, the
Company would experience serious harm and the competitor would have a unique advantage against the
Company. Employee hereby covenants and agrees that (A) at no time during Employee’s employment
with the Company and (B) at no time until the two years from the date of Employee’s termination
(the “Non-Compete Period”), will Employee (i) develop, own, manage, operate, or otherwise engage
in, participate in, represent in any way or be connected with, as officer, director, partner,
owner, employee, agent, independent contractor, consultant, proprietor, stockholder or otherwise,
any Competing Business in any geographic territory (within or outside the United States) in which
the Company does business; or (ii) act in any way, directly or indirectly, on behalf of any
Competing Business, with the purpose or effect of soliciting, diverting or taking away any
business, customer, client, supplier, or good will of the Company.

The foregoing provisions shall not restrict Employee from (i) owning up to a 2% interest in a
publicly traded company which is or engages in a Competing Business or (ii) acting as an officer,
employee, agent, independent contractor or consultant to any company or business which engages in
multiple lines of business, one or more of which may be a Competing Business, if Employee has no
direct or indirect involvement, oversight or responsibility with respect to the unit, division,
group or other area of operations which cause such company or business to be a Competing Business.

A “Competing Business” shall mean a company or business which is engaged, or intends to engage in,
the manufacture, distribution, sale or marketing of any products which compete directly with the
Company’s products or the Company Business.

Employee acknowledges that this covenant has a unique, substantial, and immeasurable value to the
Company.

Notwithstanding the foregoing, the restrictions of this Section 5 shall terminate immediately if
your employment with the Company is involuntarily terminated by the Company without “Cause.”
“Cause” shall mean: (a) conviction of Employee of any crime deemed by the Company to make
continued employment untenable; (b) any act of gross negligence or willful misconduct in the
conduct of your employment; (c) any act of dishonesty on the part of Employee whether relating to
the Company or any of its subsidiaries, its affiliates, employees, agents or otherwise; (d)
failure by Employee to comply with the Dean Foods Code of Ethics, or any conduct of Employee which
brings the Company or any of its affiliates into disrepute, in each case as determined by the
Board of Directors.

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          6.
Non-Solicitation. Employee hereby covenants and agrees that at no time
during Employee’s employment with the Company and during the Non-Compete Period, will
Employee (i) recruit, hire, assist or solicit, directly or indirectly, any of the Company’s
employees to leave the employ of the Company or (ii) solicit any customer or prospective
customer of the Company for the purpose of (1) inducing or otherwise intending to cause
such customer or prospective customer to alter or end its business relationship with the
Company or (2) interfering with the Company’s business relationship with such customer or
prospective customer. For the purposes of this Agreement, “customer” shall mean any
company that was a customer of the Company at any time during the term of Employee’s
employment with the Company, and “prospective customer” shall mean any company that, to
Employee’s knowledge, was actively solicited by the Company at any time during the term of
Employee’s employment with the Company.

          7.
Remedies. Employee acknowledges, understands, and agrees that the
restrictions contained in Paragraphs 2, 3, 4, 5, and 6 of this Agreement are reasonable, fair,
and
equitable in scope, terms, geographic area and duration, are necessary to protect the
legitimate
business interests and good will of the Company, and are a material inducement to the
Company to employ Employee and to enter into this Agreement, and that any breach or
threatened breach of such restrictions would cause the Company substantial and irreparable
harm for which there is no adequate remedy at law. Therefore, Employee agrees that in the
event of any such breach, any unvested stock options, restricted stock awards or other equity
grants shall be immediately canceled and all of Employee’s rights thereunder shall be
immediately terminated. In addition, if the Company deems such action warranted by the
particular circumstances, the Company shall be entitled to equitable relief including, but not
limited to, temporary, preliminary, and permanent injunctive relief, including the issuance of a
temporary restraining order, in order to secure the specific performance of this Agreement
without the necessity of posting bond or security, which Employee expressly waives. Employee
agrees that the rights of the Company to obtain injunctive relief shall not be considered a
waiver of the Company’s rights to seek any other remedies it may have at law or in equity.

          The restrictions set forth herein shall be construed as a series of separate and severable
covenants. Employee agrees that if in any proceeding, the tribunal refuses to enforce fully any
covenants contained herein because such covenants cover too extensive a geographic area or too
long a period of time or for any other reason whatsoever, any such covenant shall be considered
divisible both as to duration and geographic area so that each month of a specified period shall
be deemed a separate period of time and each county in each particular state (or such other
geographic subdivision as the tribunal determines is reasonable) a separate geographic area,
resulting in an intended requirement that the longest lesser period of time or the largest lesser
geographic area found by such tribunal to be a reasonable restriction shall remain an effective
restrictive covenant specifically enforceable against Employee. Further, the covenants contained
in Paragraphs 2, 3, 4, 5, and 6 shall be construed as agreements independent of any other
provision of this Agreement, and the existence of any claim or cause of action of Employee against
the Company or any of its employees, agents, shareholders, directors, or officers, whether
predicated on this Agreement or otherwise, shall not constitute a defense to enforcement by the
Company of any of these covenants.

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          8.
Return of Records. Upon termination of employment, Employee agrees to
return to the Company all documents (whether electronic or written), notes, drawings, data,
records, materials and other property of whatever nature received from or created for the
Company, and any and all copies thereof including, but not limited to, those documents,
records, and materials containing or relating to Proprietary Information. Employee agrees that
all such documents that are currently in Employee’s possession or control or which may come
into Employee’s possession or control in the future shall be the property of the Company.

          9.
Miscellaneous.

               (a) Severability. Nothing in this Agreement shall be construed so as
to require the commission of any act contrary to law and wherever there is any conflict
between any provision of this Agreement and any law, statute, ordinance, order or regulation,
the latter shall prevail, but in the event of any conflict, any provision of this Agreement
shall be
curtailed and limited only to the extent necessary to bring it within applicable legal
requirements.
If any provision of this Agreement should be held invalid or unenforceable, the remaining
provisions shall be unaffected by the holding.

               (b) Complete
Agreement. This Agreement contains the entire agreement
and understanding between the parties relating to the subject matter hereof, and supersedes
any prior understandings, agreements, or representations by or between the parties, written or
oral, relating to the subject matter hereof. It may not be modified, except in a written
document executed by both parties to this Agreement.

               (c) Other
Agreements. Employee represents and warrants that Employee
is not a party to or bound by the provisions of any other agreement which would prevent or
impair Employee’s ability to render services to the Company and that Employee’s entering into
this
Agreement. The parties hereto each represent and warrant to the other party that the
performance
of any obligations hereunder by such party will not violate the provisions of, or cause such
party
to be in default under, any other agreement or contract to which such party is a party or by
which
such party is bound.

               (d) Paragraph Headings. The paragraph headings used in this
Agreement are included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.

               (e) Governing
Law. This Agreement shall be governed by and this
Agreement and any disputes or controversies related hereto shall be construed in accordance
with the laws of the State of Texas, excluding any choice of law provisions that would apply
the laws of any other jurisdiction.

               (f) Waiver. No delay on the part of either party in exercising any
right, power, or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part
of either party of any right, power, or privilege hereunder, preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege hereunder.

 5 

 

 

               (g) Assignment. This Agreement and Employee’s rights and obligations hereunder
may not be assigned by Employee. The Company may, without Employee’s consent, assign its rights,
together with its obligations, under this Agreement.

               (h) Period
of Employment. As used herein, the period of employment includes any time
in which Employee is retained by the Company as an employee, director, or consultant.

               (i) Counterparts. This Agreement may be entered into in two or more counterparts,
each of which shall be deemed an original, and together shall be deemed to be one and the same
instrument.

          IN WITNESS WHEREOF, the parties have executed and delivered this Proprietary Information,
Inventions and Non-Compete Agreement as of the date first set forth above.

	 	 	 	 	 	 	 
	EMPLOYEE	 	DEAN FOODS COMPANY	 	 
	 
	 	 	 	 	 	 
	/s/
JACK F. CALLAHAN JR.

	 	By:
	 	/s/ Michelle Goolsby	 	 
	 

	 	 	 	 	 	 
	JACK
F. CALLAHAN JR.

	 	 	 	EVP & General Counsel	 	 

 6

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