EXHIBIT 10.3
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT
(this “ Agreement ”) is entered into effective
as of November 5, 2007 , by and between DEAN FOODS
COMPANY , a Delaware corporation (together with its
subsidiaries, the “ Company ”), and GREGG
TANNER (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 material reduction
in the amount of the Executive’s Annual Pay, (B) any
material reduction in the amount of Executive’s other
incentive compensation opportunities, or (C) any material
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 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.
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(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.
(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 13
th
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 awa
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