CHANGE IN CONTROL
AGREEMENT
THIS CHANGE IN
CONTROL AGREEMENT (this “ Agreement ”) is
entered into effective as of August 1, 2008 by and between
DEAN FOODS COMPANY , a Delaware corporation (together with
its subsidiaries, the “ Company ”), and Steven
J. Kemps (the “ Executive ”).
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.
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, General Counsel and Corporate Secretary
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.
(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 un
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